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A decision is expected in June

New York is sticking to its guns when it comes to taxing the likes of Amazon and Overstock.com, but the e-tailers are fighting back.

Amazon and Overstock.com are challenging a New York law passed in 2008, which forces companies with affiliates within the state to collect sales tax. However, Amazon said this law is unconstitutional because a 1992 Supreme Court decision said retailers that don't have a nexus of operation in a state does not need to collect sales tax.

New York law has an answer for that, though. It said that websites with purchase buttons for Amazon or redirect to Amazon as well as other national retailers receive fees for doing so -- making them local solicitors.

Amazon argued that web referrals are less like solicitors or a local sales force, and more like advertising -- even comparing this model to buying newspaper advertising. Of course, the state of New York disagreed, saying that there's a difference between advertising and what Amazon is doing.

Amazon and the state of New York duked it out in the State of New York Court of Appeals yesterday. A decision is expected in June.

From 2008 (when the state law was passed) until February 2012, online retailers collected $360 million in sales tax on over $4 billion in online transactions.

Amazon has been fighting states that force it to collect sales tax for years (except in Kansas, Kentucky, New York, North Dakota and Washington). The e-tailer fled many states that attempted to force tax collection on the company, such as California and Illinois. But between states looking for ways to offset large financial deficits and brick-and-mortar stores like Best Buy complaining about Amazon being unfair competition, the issue swelled.

Amazon CEO Jeff Bezos said many times that his company would agree to collect taxes if there were some sort of federal legislation.

But eventually, Amazon finally broke down and started collecting sales tax in certain states, which allowed it to build more distribution centers within those states. For instance, Amazon announced that it would collect sales tax in New Jersey last May so that two Amazon distribution centers could be built.

This led to faster shipping for customers, such as Amazon's same-day delivery program, making it more competitive than ever (especially since it still had cheaper prices than most brick-and-mortars).

However, e-commerce firm ChannelAdvisor reported last month that third-party sellers on Amazon saw a drop in sales after the new tax rules in some states. For example, Amazon started collecting a sales tax of 7.25 percent to 9.75 percent in California in September 2012. ChannelAdvisor found that its clients’ sales on Amazon before sales tax collection in California were 5 to 10 percent above other states. After the sales tax collection began, sales in California matched those of other states. In early November 2012, California sales fell 10 percent below sales in other states.

Source: Reuters



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RE: CA sales tax
By V-Money on 2/7/2013 10:58:59 PM , Rating: 2
Its not really a fair comparison, they get something for their high taxes (i.e. healthcare and school) whereas we are just raising our taxes slowly until we reach the same level but without the benefits (well, assuming that you actually work for a living). For the record, I am not for that model but I feel that if we are going to be paying ridiculous taxes anyways its the least they can do.


RE: CA sales tax
By inperfectdarkness on 2/8/2013 1:53:00 AM , Rating: 3
No...it's not a fair comparison because the European model is based off national sales tax, not national income tax.

I'm in favor of moving Amazon's principle offices to Grand Cayman.


RE: CA sales tax
By zzeoss on 2/12/2013 7:56:38 AM , Rating: 2
we have both.
In my country income (from wage) has cca 45% taxation total,(16% is income tax), so for a 550euro in hand, 450 goes as taxes.
And we also have 25% vat.
But then again i live in Romania so we're not really representative for "Europe" :D


RE: CA sales tax
By Asetha on 2/8/2013 2:04:45 AM , Rating: 1
Try the Canadian healthcare system before you think you get something from the tax dollars that are funneled to it.

Governments are incapable of understanding lean operations. It's just beyond them. As a result you get a third rate product at first rate prices, because there is no competition. It boils my blood.

-a Canadian


RE: CA sales tax
By GotThumbs on 2/8/2013 10:26:44 AM , Rating: 3
While it may not be perfect...the fact that everyone in Canada has access to health care and everyone who is purchasing items in Canada (citizens, residents, tourists and even illegals) ARE contributing to that system.

America's "Brilliant" (sarcasm) solution is to mandate (force) people to purchase insurance (Obama must get a heck of a commission check for this deal). And then they only fine people 95.00 the first year for not purchasing it. Now try enforcing this law on millions of people. It can't be done. Do you through them in jail? Nope, because then they will get 3 meals a day, FREE healthcare, access to an education and the bill goes to the law-abiding tax payers. Of which only ~50% of Americans pay income tax.

Canadians can still pay to get treatment sooner if they choose. The can also choose to come to the US for treatment if they have the money. But the key fact is everyone in Canada has legitimate access to at least the most basic of health care services...and Americans do not. We DO have a broken system where people without insurance get treatment and then the bill gets passed onto those who do have insuracne. $10.00 for a box of kleenex or 5.00 for an aspirin is how hospitals get the money from those with insurance.

In America, its the law abiding and self-sufficient that get raped/punished for others actions/choices. Not exactly justice for all.

-a Canadian/American


RE: CA sales tax
By GotThumbs on 2/8/2013 10:33:54 AM , Rating: 2
You might want to consider the old Proverb:

"The grass is always greener on the other side of the fence..."


"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke














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