Big developments in the last 24 hours in the long-running battle between the state of California and online retail giant Amazon.com–the Los Angeles Times reports, H/T to John Tomasic of the Colorado Independent:
Under the deal, Amazon would delay collecting taxes until September 2012, Assemblyman Charles Calderon (D-Whittier) said. The new law had mandated that Internet retailers start collecting state taxes in July if they had offices, workers or other connections in California.
Amazon had refused to collect the taxes and poured $5 million into collecting signatures for a ballot referendum challenging the law.
If Congress acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon’s deal with California…
Adds Tomasic:
The California deal will likely open the floodgates in states across the country, where untapped billions await in sales taxes that have gone uncollected for nearly two decades.
When Colorado tried to force Amazon to collect sales taxes, the company thinned ties with the state as a way to bolster legal standing for its anti-sales tax position. Mainly, it ended its Colorado affiliate program, where website owners here receive small commissions by referring surfers to Amazon to buy things. Cutting physical ties is an approach the company has taken in Texas, as well, where it shuttered a distribution center. The company, however, has more substantive ties in California, where for example it manufacturers its Kindle readers through a contractor company…
In February, the Seattle Times called out Seattle-based Amazon for the “slick strategy” it has adopted in dodging sales taxes “all across America.” The paper’s editorial board noted that the company had enjoyed the benefit of tax-free status long enough. Its roots were solidly planted. It is now one of the most successful companies in the world. The board wrote that the time of reckoning was drawing near.
We’ve said it over and over: the battle between states who need revenue and online retailers who benefit from tax-free sales is about one thing and one thing only–competitive advantage. Local retail businesses around the nation, like those represented by the Colorado Retail Council, are the losers against giant online retailers who don’t remit tax. And we’ll say it again: the politicians who cite the battle over Amazon as evidence that Colorado is not “business friendly,” like Rep. Amy Stephens, are actually advocating against Colorado business.
Though perhaps not for very much longer.
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They can’t pull out of everywhere. Local businesses need to advocate strongly.
Other than Amazon “cracking” (vs. the biggest state in the country), how does this affect Colorado’s attempts? Amazon already collects sales tax in a number of states, but only ones where its nexus complies with the Supreme Court ruling.
And wasn’t the Colorado version aimed at requiring companies to report sales to the state so DOR could then go after residents for “use tax,” which is a whole can of worms different than having the online retailer collect the tax?
Not sure how this changes anything much here.
I think the california law will serve as a model. That amazon does business in a state will be enough to begin requiring it collect sales tax, which will not be uncomplicated, of course. The colorado law is no good. I think lawmakers here have to start from scratch.
Merely shipping into a state isn’t enough. If the California law is a “model,” then it doesn’t help Colorado one bit in the scenario you’re describing.
In any case, the push for federal law is on in earnest.
but the Supreme Court has said an out-of-state company has to have an actual, physical presence in a state before that state has any authority to compel the company to do anything.
If what you suggest would pass muster, why doesn’t Colorado just redefine anything it wants and start imposing an income tax on Texas companies since Texans spend a lot of time here?
Since Texas’ governor thinks secession would be a good idea, can we start requiring passports from them, too?
Forcing online to pay sales tax is pro local brick & mortar business and anti local online businesses.
The present system favors online as they don’t have to go through the hassle of reporting sales tax anywhere as well as the final price is lower. Once this goes through online businesses will be reporting to hundreds of taxing authorities while brick & mortar stores report to 2 authorities for a given store.
The large companies, both online (like Amazon) and brick & mortar (like Target) do have to report everywhere, but spread that overhead across a very large number of sales. But the online companies with a small number of sales – they’ll get royally hammered.
My company is ok as our customers are pretty price insensitive. So we’ll figure out what the added overhead of this is and increase our prices to match. But for a lot of online companies, like ones selling used books, this will be a major hit.
Yes online should pay sales tax. But it should be structured in a way where the overhead of collecting and remitting the tax is equivalent to what a single brick and mortar store faces.
Let’s say 6% applied on all on-line products. (I don’t think sales tax applies to services.)
Then allocate revenues back to the states and or localities.
Simple. Reasonable. Levels the playing field.
But the varied rates are not that big a problem – that can be handled in software. What’s needed is that you report to a single authority for sales anywhere in the state.
I assumed that MetaData was proposing that the state would allocate some fraction back to the locality, not that the vendor would be responsible.
And the single place to report nationwide – that would be vonder-bar.
Sorry MetaData – I didn’t read carefully. Very good idea – would be a great solution.
Late Summer Vegetable Soup with Bacon, Garlic, and Thyme
Ingredients
3 strips pastured bacon, diced
4 scallions or one medium onion, diced
5-6 cups diced late summer vegetables such as squash, green beans, peppers, turnips, and potatoes
1 quart homemade chicken stock
2 cups water
6-8 garlic cloves, minced
~1 tablespoon fresh thyme leaves, chopped (or 1 tsp dried)
1-2 teaspoons lemon juice
sea salt to taste
Directions
In a soup pot over medium heat cook bacon until the fat has rendered and it is crisp. Add onions and vegetables with a pinch of salt. Saute until fairly browned, 5-8 minutes. Add garlic and saute one more minute.
Add stock and water. Raise heat to medium-high and scrape bits from the bottom of the pan. Bring to a boil. Reduce heat, add thyme and simmer 15-20 minutes or until all vegetables are tender.
Add lemon juice, taste and add salt as necessary. Allow to cool slightly before serving.
means you have to admit that the overhead of reporting to 50+ authorities across the state is substantial overhead.
David, you’ve been repeating the same talking points for years now. Can you use bold face or flashing text to indicate when you come up with some fresh ones?
And I cannot believe you’ve got a problem with bacon, garlic and thyme. If you weren’t such a fussy wussy, you could be enjoying that soup now.
Is the repetition on that boring you too? (And no they’re not close to equivalent.)
My concern is a lot of the legislators are so concerned with increasing revenue that they don’t take into account the overhead of any given approach. And then there will be shocked surprise when they implement something like this poorly and we see the number of online start-ups plummet and we never see the jobs those companies would have created.
Keep in mind the job growth comes primarily from small start-ups. Driving them out of business would be a bad thing. And the answer does not have to be no online sales tax, it just has to be a system where the overhead is similar to a single physical store.
Period.
Nobody much gives a shit about your complaints. You’re like the boy who cried “wolf.” After a while, nobody takes you seriously.
That’s absurd. You’ve got an enormously larger market, and you’ve been getting breaks on overhead for years. Time to pay the piper.
Here’s how we could implement your proposal: restrict your sales to customers within your own ZIP code. How about making it even easier on yourself by refusing to deliver your product through the mails or allowing customers to download it? If someone wants to buy what you’re selling, they can darn well get in the car and drive to your location — let’s call it a “store” — and you can buy some display cases and pleasant lighting to “showcase” your merchandise. Maybe if you put in a coffee bar you’d get more customers willing to spend more time shopping! And you’ll have to put an end to Beer Fridays — your customers don’t want to buy from tipsy sales people.
Honestly, if you concede above that software can take care of varying tax rates across numerous jurisdictions, I don’t see how you can’t use fancy computerized reporting software to generate 50 different “statements” and use advanced mailing software to print 50 envelopes (or have your interns type those up) and then make a “run” to the post office after your interns have “licked” the stamps. (Those come in rolls now, so shouldn’t be too hard to apply. When your business gets big enough, you can even get a “postal meter,” it’s a complicated device that seems to create its own postage.)
Job growth comes from small start-ups that aren’t scared of a little paperwork. The ones that are should be strangled in their infancy, otherwise they become a burden on society. Anyway, it’s too hard to actually hire people because public schools suck and it’s confusing to figure out which online job sites are appropriate for particular jobs, so this “job growth” promise is illusory. If you start making these companies actually send out 50 pieces of mail a month, you might as well close the doors now.
You should start a company that provides this as a service. If your fee is low (because it’s so easy) we’ll hire you. And so will a ton of other companies.
as a business owner, but a quick look at the dept of revenue website makes it look like a serious juggling act once you’re dealing with multiple locations.
While many taxing districts collect their revenue through the state, there are lots of home-rule cities and counties that don’t and require a separate sales tax license. With enough volume, an online company would have to invest the sort of manpower as that of the finance department of a large political campaign to keep up with tax liability since it’s possible that each unique sale represents a different combination of taxing authorities. Just sending in the checks could get to be a major hassle since you can automate rate lookup, but remittance isn’t a standard procedure.
Heck, for non-tangible goods that don’t have a shipping address, there’s even further complication. You can ask somebody to only use a credit card for payment and use the address on the card (adios paypal) or you can ask for the customer to supply an address (every customer is somehow from rural Texas now?) I’ve actually bought a few things using my phone– would it be worth my while to drive out beyond city limits?
You missed her. Admit it.
…who if you took the right 3 stills of them, you couldn’t make something equally creepy? Bitch about her policies – this is a cheap shot.
some of the recent Iowa State Fair corndog eating photos might make very interesting fodder . . .
That was a cheap shot.