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Old 10-06-2012, 10:50 PM   #1
scrapking
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Amazon and the sales tax question

Amazon goes out of its way to avoid having to collect sales taxes for its customers. They modify their business practices (such as threatening to cut all link affiliates in North Carolina when that state attempted to use them as a way to force Amazon to collect tax in the state) and do absolutely anything they can to avoid it.

This doesn't exempt the customer from owing the tax, it merely puts the onus on the customer to voluntarily remit it. I'm curious, has *anyone* on this site ever done so?

I see people talking about religious/theological books, or about various moral/ethical issues, on this site. Sometimes I happen to observe that they list a Kindle of some description as their device of choice, and happen to live in a jurisdiction where Amazon doesn't collect the tax on their behalf. I can't help but wonder, do they know? Do they do as required of them by law? Most people interpret Christianity, for example, as requiring its followers to pay all taxes they owe (render unto Caesar, etc.).

I'm curious how people who live in those jurisdictions feel about this, and how they act in response to it. My personal approach is to do use all legal means available to me to reduce my tax bill, but to pay every penny of tax I owe. When a store offers for me to get a discount in exchange for paying with cash and it not being rung into the till, I always decline. If I even suspect there's a tiny chance that this might occur, I make sure to pay with debit or credit so that it has to be rung into the till by the proprietor. I enjoy the services taxes pay for, so it would be immoral of me not to pay my fair share IMO.
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Old 10-06-2012, 11:03 PM   #2
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I pay them. The first year Ohio put the law into place, there was a tongue-in-cheek editorial in our local paper about how on 2% of Ohioans are shopping on that new-fangled internet thing. So I know I'm in the minority when it comes to admitting it.
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Old 10-07-2012, 05:29 AM   #3
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I live in Oklahoma and I pay them (or at least what the state says I owe). I say that because I think it is a voluntary thing (at least if you put zero on the amount of tax owed I don't think they go after you). I use TurboTax, and TT tells me what Oklahoma has decided is the average tax owed for someone with my income and I pay it ;-)

I'm don't keep track of everything I buy (sometimes it is all I can do to keep my tax info organized and get it in on time!) so this is as good as it gets for me. I would not be opposed to Amazon, etc charging tax. The convenience is the big draw for me and anything big (like TV-size big) I will be buying locally where they will deliver/install for me.

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Old 10-07-2012, 07:01 AM   #4
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Originally Posted by scrapking View Post
This doesn't exempt the customer from owing the tax, it merely puts the onus on the customer to voluntarily remit it. I'm curious, has *anyone* on this site ever done so?
I did while living in a state with a use tax.
It's no biggie; Amazon records all your transactions so I simply tallied up all the taxable purchases for the year and added the extra $50 or so to the tax bill. It was still cheaper than buying local and it was a low tax state with good financial management.
Now if it had been California, DC, or NYC I surely would not have payed. Them folks waste more tan enough taxpayer funds.
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Old 10-07-2012, 07:34 AM   #5
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I know this is probably a question for Americans, but I'll take the opportunity to express my dissatisfaction with the additional charges by Amazon. I don't know if it is only where I live or also in other parts of Europe, but, for example a book that is $0,99 for Americans, is $3,44 for me. VAT here is 20% and I expect to be charged something in the range of $1,20 (as it is when I shop from Kobo). I guess the difference comes from the "free" shipping.
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Old 10-07-2012, 08:11 AM   #6
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I know this is probably a question for Americans, but I'll take the opportunity to express my dissatisfaction with the additional charges by Amazon. I don't know if it is only where I live or also in other parts of Europe, but, for example a book that is $0,99 for Americans, is $3,44 for me. VAT here is 20% and I expect to be charged something in the range of $1,20 (as it is when I shop from Kobo). I guess the difference comes from the "free" shipping.
I live in Brazil, and if I try to buy any book using my brazilian address, there's a $2 surcharge on every book (not sure whose fault this is). Therefore I always use a fake US address and a proxy to purchase Kindle books.

As for the question posed by the OP, since I'm not a resident of the US I don't pay the tax when Amazon ships stuff to my hotel. And speaking as a tax auditor familiar with the literature on tax compliance, I highly doubt a substantial fraction of buyers ever pay such taxes.
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Old 10-07-2012, 08:21 AM   #7
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As for the question posed by the OP, since I'm not a resident of the US I don't pay the tax when Amazon ships stuff to my hotel. And speaking as a tax auditor familiar with the literature on tax compliance, I highly doubt a substantial fraction of buyers ever pay such taxes.
For that very reason, it seems daft to me not to tax at source.
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Old 10-07-2012, 09:08 AM   #8
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For that very reason, it seems daft to me not to tax at source.
In the US, sales taxes are collected at the time of sale. However, due to the commerce clause, States cannot levy taxes on goods from other States. That's the loophole Amazon employs to avoid collecting millions in sales taxes.

Nonetheless, sales taxes as all single-phase taxes, are particularly weak against such tax avoidance schemes. Besides, the incentive to under-report tax liabilities is that much greater (since one merchant bears the burden of collecting the tax, and the retail level - and the customer will also benefit from the tax avoidance).

Value-added taxes (VAT), on the other hand, are self-enforcing. Since it's collected at every step of the supply chain, each buyer needs receipts with the actual price paid for the goods (as it is used in the value-added calculation), thus increasing compliance (the buyer demands accurate receipts, in order to reduce his own tax liability down the chain).
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Old 10-07-2012, 05:41 PM   #9
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Value-added taxes (VAT), on the other hand, are self-enforcing. Since it's collected at every step of the supply chain, each buyer needs receipts with the actual price paid for the goods (as it is used in the value-added calculation), thus increasing compliance (the buyer demands accurate receipts, in order to reduce his own tax liability down the chain).
I agree, but good luck convincing anyone in the U.S. to roll out a VAT anytime soon. Though with Canada more than half switched over to VATs now from U.S.-style sales taxes, the U.S. is now one of the few without one.

What surprises me is the slow pace of jurisdictions in the U.S. collecting tax on online purchases. You'd think with the billions of dollars moving in and out of e-commerce, they'd be wanting to make sure they got their pound of flesh off of it. I understand that some are co-operating with e-commerce companies in exchange for them providing jobs within that jursidiction, but what about the rest?
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Old 10-07-2012, 05:58 PM   #10
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What surprises me is the slow pace of jurisdictions in the U.S. collecting tax on online purchases.
No surprise.
There are two principles at work:
1- As pointed out above, the Federal Constitution's Interstate Commerce Clause prevents states from taxing out-of-state vendors. They can only tax companies physically located within their borders. (In legal terms: presence.)
2- The Congress has repeatedly rejected all laws attempting to tax internet commerce in the interest of fostering innovation in digital commerce. (They may be onto something as the internet has fostered a *lot* of new business models. Not all succeed, but none has failed because of sales taxes. )

For years, state after state has passed laws trying to redefine presence and failed to prevail in federal court. In a few cases, Amazon has *voluntarily* agreed to collect sales taxes rather than litigate further in return for state concessions. (The expectation being that Amazon was already looking to establish a physical presence in the state anyway.)

Also, for years, there has been talk of a federal internet sales tax.
So far, it has not happened.

(BTW, in those states that Amazon collects sales tax? They still easily undercut the in-state B&M retailers.)
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Old 10-07-2012, 11:06 PM   #11
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It would be an incredible burden for small business's to have to pay sales tax in multiple states. You have to have a sales tax number for each state. Some states require you to report which counties the sales tax is collected in. The paper work ca be time consuming to fill out properly. Some state's websites are more intuitive and others are a bear to use. Some you can submit the forms and pay online. Others you have to mail in the paperwork and check. Some states let you keep a very small percentage of the money collected to defer the paperwork costs.
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Old 10-07-2012, 11:14 PM   #12
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(BTW, in those states that Amazon collects sales tax? They still easily undercut the in-state B&M retailers.)
Paying sales tax is not an expense for the store, except for time spent doing the paperwork. The store collects it in addition to what they are charging and hold it until the specified date they have to submit it to the state. Larger companies can actually make a little extra in interest until they pay the state.

I have never understood why people put so much emphasis on not paying sales tax on smaller purchases. On larger ones it can add up. Free shipping or a discount is a better savings.
It's like the tax free weekends here in Georgia. The people flock to the stores trying to save on sales tax. The retailers know this and discount less or not at all. The consumer is saving only 7% on the dollar. If you wait for the big sales you save a lot more than 7%.
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Old 10-08-2012, 03:17 AM   #13
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I have never understood why people put so much emphasis on not paying sales tax on smaller purchases. On larger ones it can add up. Free shipping or a discount is a better savings.
There's what? 300 million or so people in the US? If every one of those fails to pay $10 a year in sales tax, that's an income of $3bn that the government is being deprived of. That's serious money!
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Old 10-08-2012, 07:28 AM   #14
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For the government yes. But, for the individual it is a pittance of a savings. They would save more money by shopping the Back to School Sales rather than the Sales Tax Holiday.
Sales taxes are set by and collected by the state governments. The local county governments and some municipalities also add to the sales tax. The sales tax rate in the State of Georgia is 4%. The county I live in adds in 2% and then the voters added a 1% LOST (Local Option Sale Tax). This makes the sales tax rate where I live 7%. The county has to share the sales tax it collects with the county municipalities. Some of the municipalities in my county have sued the county, more than once, over the equal distribution of those taxes.
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Old 10-08-2012, 08:08 AM   #15
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There's what? 300 million or so people in the US? If every one of those fails to pay $10 a year in sales tax, that's an income of $3bn that the government is being deprived of. That's serious money!
Government is "being deprived of"?!
It's not as if they're *entitled* to it.
And it most certainly is not *their* money.
The periodic tax revolts are reminders to the politicians that the US populace is not sheep willing to be shorn at their convenience. The country was founded out of the unwillingness to blindly pay taxes, after all.
(Among other issues.)
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