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Book Nook provides readers with insights into the world of books. Vick Mickunas takes you into the center of the publishing world with the latest book buzz, book reviews, and exclusive chats with authors..Home > Blogs > Book Nook > Archives > 2011 > July > 17 > Entry
Amazon.com versus the State of California
So it has finally come to this: internet behemoth and mega-bookseller Amazon.com is taking on the State of California. Amazon has grown and grown and grown. They run a smart business.
Some of Amazon’s prosperity is due in part to a juicy loophole in our tax laws. Have you ever ordered anything from Amazon? Did they charge you sales tax? Probably not. And that is an advantage which Amazon has exploited for years. Brick-and-mortar retailers in your home town have to charge sales tax. Forget about Amazon’s massive advantage in regard to economies of scale. Wal-Mart is a massive retailer, too. But they have to charge you sales tax when you buy from their stores. Amazon can offer lower prices in one regard because they are not collecting sales tax in most states.
The states are bleeding revenue these days and the State of California wants to start collecting sales taxes on all those Amazon sales being made in California. Amazon is fighting back. Here’s more from the Sacramento Bee:
“The tax war between California and Amazon.com has been brewing for 16 years, since the day the retailer with the sly-grin logo opened for business.
Amazon has fought against collecting sales tax from customers wherever possible, as a way of underpricing brick-and-mortar competitors such as Barnes & Noble. It was a big reason why the Internet pioneer, exploiting a wrinkle in the tax laws, put its headquarters in Seattle instead of the Bay Area. The choice meant it would have to collect sales tax from Washington state customers, but not in California, the biggest market of all.
But now California believes it has caught up with Amazon. Gov. Jerry Brown signed a law last month saying online retailers with a physical presence in California must collect sales tax.
With that, a cold war turned hot. Amazon has refused to collect the tax and fired its 10,000 California affiliates - businesses that earned commissions by allowing customers to click through their websites to Amazon.
Escalating hostilities, Amazon last week unveiled a ballot referendum to overturn the law.
A ballot fight would pit a $34 billion-a-year Internet titan against the largest state in the union. California’s allies include traditional retail powerhouses such as Wal-Mart and Barnes & Noble.
“You’ve got yourself an epic battle,” said Jack Pitney, a political analyst at Claremont McKenna College.
Amazon isn’t just the No. 1 Internet retailer. It’s the lead dog when it comes to fighting the online tax issue. It is suing New York over a law similar to California’s and dangling jobs for local communities to get lawmakers in other states to ease off.
But lawmakers are pushing back. Nine states have passed some kind of Internet sales tax law, none more influential than California. So far Amazon has managed to sidestep those laws, but momentum is building.”
What do you think? Should Amazon be collecting all those sales taxes? To read the rest of the article click HERE:
Vick Mickunas
p.s. And you can follow me now on Twitter: @BookNookVick
Permalink | Comments (12) | Post your comment | Categories: in the Amazone
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By Page Turner
July 26, 2011 12:53 PM | Link to this
Amazon DOES have facilities (under other names) in California, including the lab that developed the Kindle, according to some sources. So, clearly Amazon should be collecting and paying California sales taxes. And, Amazon should rehire its California affiliates and quit playing games.
By Jack
July 19, 2011 10:48 AM | Link to this
Jack, yes, Amazon does not collect your sales tax for your product, but that doesn’t mean you do not owe it. In fact, you should be reporting it on your tax return that you owe that sales tax. You don’t do it, nor does anyone else (most likely) in all of the US, but you do owe it. Sales tax and shipping are two different things. Do not muddy the discussion.
By Page Turner
July 18, 2011 2:03 PM | Link to this
Amazon has a bonafide physical presence (distribution centers) in 11 states that charge sales tax and two states that don’t, according to Wikipedia. Amazon apparently does not have a distribution center or offices in California. BTW - both houses of the California legislature have been controlled by Democrats since 1970, except from 1995-96 when the Assembly had a Republican majority, again according to Wikipedia.
By vick
July 18, 2011 11:56 AM | Link to this
Page Turner, thanks for the info on the California legislature. I have corrected my info. Dave, I can order from Amazon with my Prime subscription and have my order delivered to my door within 48 hours which is quick enough for my needs in most cases. Mark, I believe that Amazon would be collecting the sales taxes when they bill their customers. So all that money would be in one central reservoir for the states. Individual “third party sellers” selling through the Amazon system would not bear any additional burden of trying to figure out all the state tax rates, etc. Of course, their prices would be higher but Amazon could bill at the correct rate in every county in the USA. And they have the processing capability to do so if they were forced to do that…
By Page Turner
July 18, 2011 11:47 AM | Link to this
Yes, Amazon should be collecting state sales taxes where applicable. BTW - “The California State Legislature currently has a Democratic majority, with the Senate consisting of 25 Democrats and 15 Republicans and the Assembly consisting of 52 Democrats and 28 Republicans.” — Wikipedia.
By Dave
July 18, 2011 11:38 AM | Link to this
I do not have to pay sales taxes when I buy from Amazon, but I DO have to pay shipping and accept a delay in getting my merchandise. Usually I buy on-line because I can’t get the product locally.
By Mark from St Paul
July 18, 2011 11:37 AM | Link to this
I think everyone is missing the real story here. If California wins, everyone who does business online will have to suddenly learn the sales tax laws for all 50 states and all the territories like Guam and Puerto Rico. I used to write resumes online. I doubt I had more than half a dozen clients from Utah, and maybe one from Wyoming over a fifteen-year time period. How much more do you think I would have had to charge, had I been forced to figure out sales tax for these clients? The internet lets one person become a nationwide business, but sales tax collections can’t be done by small businesses because it’s too time consuming.
By Jack
July 18, 2011 11:00 AM | Link to this
In this day and age, yes, I think Amazon should be collecting the sales tax. But, the burden of collecting the tax should be simple, and should be setup by the states in some fashion. The Supreme Court has ruled in favor of companies (mostly catalog types) that they do not need to collect sales tax if they don’t have a presence. The fact that California passed a law that an ‘affiliate’ constitutes a presence, that is why Amazon nixed their California affiliates. (These aren’t “employees”. That’s just political diatribe.) California should request, maybe through subpoena, all sales records of products being sent to California addresses, then send sales tax receipts to the individuals in California.
By vick
July 18, 2011 10:56 AM | Link to this
SG, California had record breaking deficits under a Republican governor (Arnold). Now a Democrat (Gov. Brown) is trying to get Amazon to pay millions in state sales taxes. Are you saying that Amazon should not be collecting state sales taxes in California and elsewhere??
By Squirrellygirl
July 18, 2011 9:13 AM | Link to this
California’s left leaning ways causes some companies not to want to do business with them. Maybe CA should become a separate country? I don’t think the rest of the U.S. should have to pay extra taxes to help CA when they waste their money on special interests. Just sayin’…
By an angry man
July 18, 2011 8:54 AM | Link to this
take heed Ohio, taxes kill jobs. California raises taxes, Amazon says “see ya” and fires everyone in California. there are states that want business and jobs and there are states that want taxes and unions. taxes and unions kill jobs.
By lmj
July 17, 2011 10:34 PM | Link to this
Being able to collect that tax would certainly benefit many states. When I was in college and working retail in Toledo, it was not unusual for customers from Michigan come into the store (which had no units there) and purchase items and then have them mailed back home - so they wouldn’t have to pay the sale tax (which was only 3% - yes, I’m a dinosaur).