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Amazon Folds In California Sales Tax Deal 639

Posted by timothy
from the mussolini-would-be-proud dept.
theodp writes "In a deal indicating all sides appear ready to call a truce, the San Jose Mercury News reports that Amazon.com is offering to back down from its referendum drive to repeal an online sales tax in exchange for a one-year moratorium on collecting the tax. Under the deal, Amazon would agree to begin collecting the tax from California residents in September 2012, unless Congress takes action on Internet sales taxes before then. The development comes a day after a NY Times editorial ripped Amazon over its sales 'tax dodge.'"
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Amazon Folds In California Sales Tax Deal

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  • [sigh] (Score:3, Insightful)

    by MyFirstNameIsPaul (1552283) * <myfirstnameispaul@gmail.com> on Thursday September 08, 2011 @01:15PM (#37342014) Homepage Journal
    One more reason to leave California.
    • by alen (225700)

      not like all the natives are always voting new spending via referendums and then complain about taxes

      • by Kenja (541830)
        Here's the problem with the California constitution. Spending and income must be two separate mesures on the ballot. This means (for example) extending the B.A.R.T line is one item to vote on, and paying for the extension is another. Often people vote yes on the spending but no on the income mesure.
        • Re:[sigh] (Score:5, Funny)

          by h4rr4r (612664) on Thursday September 08, 2011 @01:45PM (#37342500)

          In that case the voting machine should be designed to smack them. A giant ACME cartoon style ballot blow to the head would also be acceptable.

    • Re:[sigh] (Score:5, Insightful)

      by DJRumpy (1345787) on Thursday September 08, 2011 @01:35PM (#37342322)

      Why should Amazon be able to avoid paying taxes while any other business in the state does?

      I'm sick of corporate America being treated like royalty. They have more voting power, more funds, lower taxes, and seemingly unlimited resources to control the political landscape to the detriment of the consumer. When they start hiring and stop giving all their money to their CEO's, perhaps I might have more sympathy, but until I see they are actually interested in supporting the states and municipals where they do business, then I can't seem to shed a tear for them.

      • Why should Amazon be able to avoid paying taxes while any other business in the state does?

        Why should California be able to levy a tax on a business that is run out of Washington? Oh, wait...

        http://en.wikipedia.org/wiki/Quill_Corp._v._North_Dakota [wikipedia.org]

        • Re: (Score:2, Insightful)

          by Anonymous Coward

          Because they do business in California.

          I love how conservatives love states' rights, until the states decide to go ahead and do something they don't happen to agree with personally.

      • I'm confused how you bring benefits for "Corporate America" into an argument which is most clearly "online corporate america" vs "brick and mortar corporate America". In either case, the tax itself get collected from the consumer, so at the end of the day it's really more of a State Government vs an easy way for people to cheat on their state taxes thing.
    • Re:[sigh] (Score:5, Insightful)

      by teg (97890) on Thursday September 08, 2011 @01:39PM (#37342392) Homepage

      One more reason to leave California.

      If you pay the use tax as you are supposed to, this doesn't matter. If it does matter, then it shows the point of why Amazon should collect sales tax...

  • The actual article is here:
    http://www.mercurynews.com/california-budget/ci_18849537 [mercurynews.com]
    You do need to log in though.

    Given the fact that there is a supreme court ruling from the Sears days which is in Amazon's favor, I'm really surprised by this.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Given the fact that there is a supreme court ruling from the Sears days which is in Amazon's favor, I'm really surprised by this.

      The ruling "from the Sears days" is that if you aren't physically in the state, you aren't required to collect sales tax in the state.

      Amazon's shipping company is in the state. They probably had a 50-50 shot at snowing over gullible juries and/or convincing courts that their shipping/warehousing/fulfillment company, wholly owned by Amazon, named Amazon, and shipping only things o

  • by initdeep (1073290) on Thursday September 08, 2011 @01:21PM (#37342096)

    The consumers who are purchasing from Amazon and sites like it are dodging sales tax, not Amazon.
    Those people have a LEGAL requirement to self-report those taxable items on their yearly tax returns and pay any and all sales tax due on said items at that time.
    Just because those people aren't doing so, doesn't put Amazon and other online sites in the wrong.

    • by Kenja (541830) on Thursday September 08, 2011 @01:26PM (#37342156)
      While thats true in theory, in actual practice the onus is on the retailer to collect sales taxes. The corner store here couldn't get away with not collecting sales taxes and then saying that it was up to their customers to deal with it. Frankly, I dont think there should be two sets of rules, one for brick and mortar stores and one for online. Especially when just about everything I order from Amazon ships from within the state. If I am in california and buy something from a company with a presence in California and my purchased items ship from California to me I should pay California sales taxes.
      • by John Bresnahan (638668) on Thursday September 08, 2011 @01:30PM (#37342260)
        Should the corner store have to collect different sales taxes for the home state, home county and home city of every visitor who walks in and buys something from the store?
        • by Kenja (541830)
          No, they should collect taxes based on the state they are doing business with. Just like the 7-11 in Texas collects different taxes then the one in California. Why should Amazon be different?
      • by Jane Q. Public (1010737) on Thursday September 08, 2011 @01:45PM (#37342498)

        "While thats true in theory, in actual practice the onus is on the retailer to collect sales taxes."

        No, it's not. In fact, if the retailer is in a different state, with no "physical presence" in the purchaser's state, then it is highly illegal -- unconstitutional in fact -- for the retailer to collect sales tax.

        To get around this, states have enacted what they call "use taxes". But it is up to the individual -- very definitely NOT the retailer -- to report on, and pay, use taxes.

    • by Ruke (857276)
      A sales tax has officially and legally been levied against Amazon. If they try to change the law to make that tax no longer apply, I'd call that an attempt to "dodge" the tax.
      • A sales tax has officially and legally been levied against Amazon. If they try to change the law to make that tax no longer apply, I'd call that an attempt to "dodge" the tax.

        So, if New York were to pass a law requiring all residents of California pay New York income taxes, then Californians would be dodging that tax by trying to get that law overturned?

        The Supremes have already ruled that you don't have to do Sales Taxes in any State you don't have a physical presence. Making a State Law that says you do

    • It's not just Amazon, either, what about all the 3rd party vendors who sell through Amazon? Although the argument for taxation here is obvious, I see a lot of vendors moving away from Cali because they'll be competing against vendors who are in states where they don't charge sales tax.

    • by fermion (181285)
      Furthermore, that is like saying that moving into enterprise zone is dodging taxes. This is not the case. By virtue of geographic location the state of california given them special tax breaks not available to others not in the geographic zone.

      The current situation is that sales tax cost jobs by reducing the amount that can be purchased with a given sum. States like Tx and Ca that insist on using sales tax as the basis for revenue are killing the private job market just to maximize the number of govern

  • Like them or not, Amazon is a very forward thinking tech company with ambition, experience and a very well paid staff of top-notch Executives. They are up against an understaffed, underpaid group of Government workers. I doubt that they "folded". My guess is that they have a better plan up their sleeve.
    • by compro01 (777531)

      My guess is that they have a better plan up their sleeve.

      Presumably they're thinking Congress will do something before the 1 year wait is over.

    • by jmcbain (1233044)
      This isn't a physical wrestling match. It's a company versus a state government. Yes, Amazon folded. End of story.
    • Well, note that they stopped pushing their referendum.

      Which, unfortunately for California isn't the same as "there will be no referendum", since the private citizens of California might dislike the increase in prices also.

      Note also that the legislature in California is trying to repass the law requiring Amazon to charge sales taxes to CA residents as "a matter of urgency" (I think that's the term they use), which cannot be overturned with a referendum.

  • just to be clear (Score:5, Interesting)

    by loteck (533317) on Thursday September 08, 2011 @01:25PM (#37342148) Homepage
    Amazon also agreed to join with brick & mortar stores to begin lobbying Washington for a national internet sales tax. Think about that.
  • The Borders brick and mortar bookstore chain is dead, 10000s of people lost their jobs, and I am out of a favourite place to explore books. All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).

    Level the playing field. Make Amazon enforce a sales tax just like every other company. Yes, I know buyers are supposed to pay an Internet use tax, but the reality does not match the theory.

    And there is nothing wrong with p

    • by Kenja (541830)
      No, they died when they tried to be a coffee shop way outside of town rather then a book store.
      • Far from it - Borders did everything they could to avoid stocking sellable coffee shop items. Some friend of a High-Up pulled a deal to put a third rate food supply there. If I recall you couldn't even buy a coke or pepsi - it was all strange off-brands of expensive yuppy drinks.

        Note to Self - go see what Barnes & Noble does for refreshments.

    • by ErikZ (55491) *

      Sure. Define "Fair" first and I'll pay my fair share.

      Also, how do you know you couldn't buy civilization for 5k in taxes?

    • I live in a state with no sales tax, and I still buy from Amazon. Explain me away, please.
      • I live in a state with no sales tax, and I still buy from Amazon. Explain me away, please.

        The only states without sale taxes lack the kind of big city environs that Border's thrived in and/or you're too far from them? Unless you claim to live in Deleware, which everyone knows is a lie.

        • Up until a week ago I lived in Concord, NH, which has a going-out-of-business Borders in it at this very moment. I visited it every month or two but rarely bought anything, because their prices were too high. Everything I wanted was cheaper or available in better formats on Amazon.
    • The Borders brick and mortar bookstore chain is dead, 10000s of people lost their jobs, and I am out of a favourite place to explore books. All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).

      ...and Borders failed to adapt to a changed world. Why didn't Borders open up an online store? Why didn't Borders look into eBooks/eReaders the way Barnes & Noble did?

      It is hard to feel sympathy for large companies that fail to keep pace with new technology. If you were lamenting the failure of small, family-owned, local bookstores, you would have more of a point.

      And there is nothing wrong with paying taxes. It buys civilization. I pay $40K in taxes out of my salary each year. Do your fair share.

      Amazon does pay taxes. The problem is that California wants to get taxes from a business that operates out of Washington. The tax

    • Hmm...

      Leveling the playing field would require local retailers to find out in which city, county and state each customer lives, and then charging them the appropriate sales tax. I'm sure the local donut shop would appreciate having to keep track of hundreds or thousands of different tax rates and applying and distributing them all correctly every time someone buys a donut.

    • by SuperKendall (25149) on Thursday September 08, 2011 @01:37PM (#37342364)

      All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).

      I don't buy books from Amazon because I avoid taxes, I buy from them for the convince of wanting something and having it two days later without having to waste an hour to go get it. I like local bookstores for when I don't know what I want, and just want to browse... Borders did not deliver well on either use case.

      Thus is Borders dilemma - why would I support them over Amazon? You get none of the happy feeling of supporting a small local bookstore. Yet you get none of the vastly larger selection that Amazon has. Borders were huge, but what was really in there? I always found a better selection either at a small local bookstore or as I said Amazon, and that was what really killed them.. there is no room in the middle for something inherently specialized where small local businesses can do a better job addressing regional tastes in books than a large chain.

    • by sehryan (412731)

      Bullshit. I don't know anyone who is going to buy Amazon books over a brick and mortar over what would be a couple of dimes in sales tax. If that were true, then B&N would be out of business as well. Borders is out of business because their executives made poor business decisions, end of story.

    • The 10% savings on sales tax is a nice bonus but the real reason is Amazon offers the same items for 1/3 less than retail stores. How is that my problem? Makes a difference when a hardcover reference book is $99 at Borders plus sales tax when Amazon can sell the same thing for $66 without taxes and free shipping. Don't get me started on their $25 DVDs and $19 CDs that Walmart sells for way less...

    • All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).

      Actually all this occurred because I can buy shit on Amazon that I can't find in my local Borders bookstore. Couple that with the fact that I don't have to drive ten minutes to the Amazon store, I don't have to wait in line 10 minutes to checkout like I do at Borders, and I don't have to wander around a large, semi-organized floorspace to find the one book/author I want and Amazon becomes a much more pleasant shopping experience than Borders. Everyone I know that shops online does it purely for the conveni

    • by Firehed (942385)

      The only thing Amazon did that helped kill Borders is the Kindle - and it's hardly Amazon's fault that Borders couldn't keep up. I'd be astonished if sales tax made any appreciable impact on Borders' death.

      I've placed Amazon orders from inside a Best Buy to get the better price*, but it's not worth the delay on books - certainly not over a dollar. On the rare occasion I found something of interest in dead tree form in any bookstore, I'd just buy it on the spot unless the Amazon price was very significantly

    • by nwf (25607)

      The Borders brick and mortar bookstore chain is dead, 10000s of people lost their jobs, and I am out of a favourite place to explore books. All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).

      Please. Amazon's prices for books were much less than those of Borders, even without taxes. In fact, you could purchase books on Amazon cheaper than the clearance prices at Borders. Why pay $25 for a book when Amazon has it for $18? Same with music. I could buy a CD at Target for $14 or get it from Amazon for $10. Tax just isn't that high that I care to shop to avoid taxes.

  • As another poster here has stated, there are high-court rulings from the past that clearly state several things about this, among them that a state has no power to tax a transaction that takes place in some other state. Thus the eventual creation of "use taxes", that tax residents of a state for goods that were purchased in that other state,, without actually taxing the transaction.

    The problem is actually one of enforcement, since it is up to the individual resident to report on and pay their "use taxes"
    • by Ruke (857276)

      The problem is, if the purchase takes place over the internet, where can it be physically said to take place? The home of the purchaser? The place of business of the seller? The physical location of the server hosting the website, or hosting the credit-card-processing service?

      Congress has said that taxes can be collected if the business has a physical presence in the state where the purchase takes place. Amazon tried to get around this by calling all of their places of business in California "subsidies." Ca

  • Either a subsidiary does establish a physcial presence in the state for the parent company or it does not.

    If it does then amazon should be collecting sales taxes for CA sales under the current system.

    If it does not then CA passing law saying that it does it irrelevant since it is a Federal issue.

    But clearly Amazon's lawyers know more than me about this. So can CA pass a law saying that "all companies who sell things to CA residents are now classified as having a physcial persence in CA"???

  • BS taxes (Score:5, Insightful)

    by argStyopa (232550) on Thursday September 08, 2011 @01:39PM (#37342404) Journal

    In case anyone forgot, the US gov't - and by extension the states - aren't automagically entitled to a piece of everything.

    Property taxes are generally to provide for local services, police, fire, streets, education.
    Income taxes are generally meant to fund the operation of government, and its (allegedly) limited functions.
    Gas taxes are essentially a user fee, to fund use of the highway system (and ironically to help fund the poor struggling oil companies through tax breaks).
    Sales taxes are likewise LOCAL in function - they're justified by the 'infrastructure' that allows commerce to happen.

    So why should internet retailers pay local or state sales tax? Everything's already been paid for at least once.

    In terms of the bandwidth needed to secure the transaction and the shopper, both the shopper (through his internet fees) and the vendor (through his bandwidth charges, etc) are already paying for the hardware - wires, property easements, hefty communication taxes. In terms of shipping the goods from the vendor to the customer, someone on one end or the other is paying postage that supposedly already covers this. The seller, through the price of his goods, covers his business costs, property taxes (and the concomitant services already covered therein), etc.

    About the only thing that isn't explicitly or implicitly paid for in an internet sale is the bureaucracy involved in administering, levying, and collecting the tax. Put another way: without internet sales existing, government operates, and provides a certain level of services to the public. This should be covered by tax revenues. Now add internet sales to the picture. What specific service is the state providing that it didn't provide before? I can't think of a one. Sure, the police have started branching out their pedo squads to the interwebs, and the state Attorneys General have some more fraud cases to investigate, but I doubt either of those functions have been a net increase in manpower or services - rather, they've drawn resources from other functions already performed to add these to the mix.

    Yes, cue the Liberal Left posters who cheerfully want to pay more taxes. I invite them to do so. But the fact is that the US and State governments are not entitled by their very existence to a piece of every transaction that takes place in this country.

    We the people need to fund our government adequately, and we do so through a varied panoply of taxes. But a bewildering array of taxes doesn't mean that we need to sit back passively and let ourselves be double-dipped just because legislators have built too confusing a structure to figure out.

    • Re:BS taxes (Score:5, Interesting)

      by mewshi_nya (1394329) on Thursday September 08, 2011 @01:59PM (#37342712)

      Hey, not every Liberal likes every tax, you realize? I find sales tax in general to be regressive; I find income taxes to be too high considering the constant "need" to cut everything *but* defense and tax breaks for the rich.

      If my tax dollars were going to education and health care, instead of re-education and murder in foreign countries, I'd be pretty content with the tax rates as they are now.

  • > to repeal an online sales tax in exchange for a one-year moratorium on collecting the tax

    Wait, who folded? If the tax isn't being collected, it sounds like California folded to me.

  • The problem they are running into is that technology has changed the way it is done.

    In the past, company A was in NY and sold to person A in LA. If company A had a warehouse in LA then they had to collect sales tax. If everything was in NY then they only collected sales tax for the items sold to people in NY.

    Enter the computer age. Company A is in NY but has web servers in data centers around the US. These servers are strategically placed to make sure that everyone in the US can get to there web page.
    When a

  • by cyn1c77 (928549) on Thursday September 08, 2011 @03:04PM (#37343680)

    This issue isn't really Amazon's or California's fault. California wants to tax online purchases (especially Amazon's) because it is a profitable income source they have not been tapping into. Amazon wants to avoid it because they profit of off their customers preferentially buying online to avoid state taxes.

    I think what this really highlights is the difference of opinion between American citizens and the state governments on sales taxes. People feel that they already pay an income tax and don't want to get taxed again when they buy things. The cash-strapped (and mismanaged) government doesn't want to lose that income source.

    Personally, I am disappointed that Amazon is caving. I was hoping for their referendum to make it to a vote to see the actually CA public opinion on this issue. But then again, I never think it is a good idea to give more money to any organization (private, state or federal) that cannot balance its current budget.

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