|
The question that the U.S. Supreme Court has not yet addressed and which is the basis of the laws passed by California, New York, and other states, is this: What is a sufficient nexus? The Supreme Court said having no physical nexus except shipping into a state is insufficient. But in California, Texas, and New York Amazon may have a sufficient nexus -- the affiliates or subsidiary businesses that are wholly owned by Amazon. The issue is not clear cut and Amazon does not have a guaranteed winning hand.
The affiliates are in essence sales agents. Call them whatever you want, but the reality is that is what they are. That Amazon prefers to call them something else doesn't make it so. Just like with insurance, the affiliate gets paid for a sale made through the affiliate's link. I personally think that is a sufficient nexus if the affiliate is within the state. But it remains to be seen what the courts will think.
Amazon also, in Texas, for example, has distribution warehouses. That is a physical presence. The fact that Amazon chooses to have a wholly owned subsidiary run the warehouse does not seem to me to be sufficient separation to avoid the tax issue. I think the way it could be avoided would be if the warehouses were independently owned by persons or companies that have no affiliation whatsoever with Amazon except for a limited term contract to provide distribution services.
As for incorporating in another state such as Delaware does not solve the problem if you are still running a warehouse in California. If incorporating in a low tax state were a panacea, there would be no companies incorporated in higher tax states.
As for how to track the sales tax for each jurisdiction, there are several software programs that do this. After all, Barnes & Noble, Sears, the Agency 6, and WalMart, for example, have to collect sales tax for online sales and do so, so clearly this is not a mountain that can't be readily conquered.
|