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jswinden · 09-21-2012, 11:02 AM

In USA we have 50 states and multiple territories each with the autonomy to write and enforce their own tax laws separate from the federal tax code. As you Brits might say, it is a bloody mess! Add to that confusion another layer of confusion where each city (or appropriate taxing authority) can also charge taxes on sales as well as income if so allowed by the state or territory in which it is located. Most cities don't tax income but do tax sales, but a few tax income as well. Now add yet another layer in the form of independent school districts (our secondary education system) which can also tax property. No wonder why we have so damn many tax lawyers in the USA!

But seriously now, in the USA Congress passed a law way back when the internet was beginning to gain popularity wherein internet commerce sites were given a multiple year exemption on charging sales tax on goods sold. The rationale was to give this then new form of commerce plenty of time to establish itself and to take care of all the confusion over which taxing authorities could tax internet sales. At first taxing authority at the state level or lower could tax internet retail sales. That law has been extended and amended a few times over the years. Now states are allowed to tax sales from internet commerce sites that have a physical presence within their borders. Defining "physical presence" is controversial and ultimately up to the states and courts. Some states like Texas where Amazon has no retail stores/centers still force Amazon to charge/collect sales tax because they claim "physical presence" includes warehouse distribution centers used to speed up the delivery process.

California has just joined the list of states requiring Amazon to charge sales tax to its citizens. However, if an item was purchased before the CA requirement went into effect then the purchaser should not have had to pay CA sales tax. But the tricky part is how does CA and/or Amazon define "purchased." Since the purchased Kindle and cover are not paid for until they ship, it might be argued that they come under the new CA taxing agreement. One might also argue that placing the order prior to the new CA taxing agreement even without payment at that time might exempt the order from CA sales tax. Either way it doesn't hurt to ask Amazon to review the purchase as far as sales tax goes.

So Harry it is not about tax evasion. It is a question of whether Amazon was legally required to charge CA sales tax for this specific transaction.

09-21-2012, 11:02 AM	#69
jswinden Nameless Being	In USA we have 50 states and multiple territories each with the autonomy to write and enforce their own tax laws separate from the federal tax code. As you Brits might say, it is a bloody mess! Add to that confusion another layer of confusion where each city (or appropriate taxing authority) can also charge taxes on sales as well as income if so allowed by the state or territory in which it is located. Most cities don't tax income but do tax sales, but a few tax income as well. Now add yet another layer in the form of independent school districts (our secondary education system) which can also tax property. No wonder why we have so damn many tax lawyers in the USA! But seriously now, in the USA Congress passed a law way back when the internet was beginning to gain popularity wherein internet commerce sites were given a multiple year exemption on charging sales tax on goods sold. The rationale was to give this then new form of commerce plenty of time to establish itself and to take care of all the confusion over which taxing authorities could tax internet sales. At first taxing authority at the state level or lower could tax internet retail sales. That law has been extended and amended a few times over the years. Now states are allowed to tax sales from internet commerce sites that have a physical presence within their borders. Defining "physical presence" is controversial and ultimately up to the states and courts. Some states like Texas where Amazon has no retail stores/centers still force Amazon to charge/collect sales tax because they claim "physical presence" includes warehouse distribution centers used to speed up the delivery process. California has just joined the list of states requiring Amazon to charge sales tax to its citizens. However, if an item was purchased before the CA requirement went into effect then the purchaser should not have had to pay CA sales tax. But the tricky part is how does CA and/or Amazon define "purchased." Since the purchased Kindle and cover are not paid for until they ship, it might be argued that they come under the new CA taxing agreement. One might also argue that placing the order prior to the new CA taxing agreement even without payment at that time might exempt the order from CA sales tax. Either way it doesn't hurt to ask Amazon to review the purchase as far as sales tax goes. So Harry it is not about tax evasion. It is a question of whether Amazon was legally required to charge CA sales tax for this specific transaction. Last edited by jswinden; 09-21-2012 at 11:10 AM.