Who killed the bookstore?

[kennyc]

Originally Posted by HarryT

I'm a little puzzled by this. Why should Amazon care whether or not they collect sales tax? They obviously have the systems in place to collect it, so what's the problem?

I think it's the management, time, personnel and all involved more than the fact.

Plus many online sites do not charge sales tax so it might be seen as a competitive negative.

[HarryT]

Given, though, that they do charge sales tax to some people already, I honestly don't see how it would cost them anything. As far as they're concerned, it's probably no more than setting some flag in a database somewhere.

Am I right in thinking that the "rule" is that they have to charge sales tax if they have a physical presence in a state? If that's so, and they have an office somewhere in Texas, it seems pretty unambiguous that they would then need to charge sales tax in Texas. Where's the "loophole" that allows them not to do so?

[kennyc]

Originally Posted by HarryT

Given, though, that they do charge sales tax to some people already, I honestly don't see how it would cost them anything. As far as they're concerned, it's probably no more than setting some flag in a database somewhere.

Am I right in thinking that the "rule" is that they have to charge sales tax if they have a physical presence in a state? If that's so, and they have an office somewhere in Texas, it seems pretty unambiguous that they would then need to charge sales tax in Texas. Where's the "loophole" that allows them not to do so?

I think you are right Harry.

[Andrew H.]

Originally Posted by HarryT

Given, though, that they do charge sales tax to some people already, I honestly don't see how it would cost them anything. As far as they're concerned, it's probably no more than setting some flag in a database somewhere.

Am I right in thinking that the "rule" is that they have to charge sales tax if they have a physical presence in a state? If that's so, and they have an office somewhere in Texas, it seems pretty unambiguous that they would then need to charge sales tax in Texas. Where's the "loophole" that allows them not to do so?

Yes, that's the rule.

The issue in TX is that the distribution center is a different legal entity from Amazon.com-the-retailer. And that under US law (which does vary from state to state), the fact that a retailer owns a distribution center (or any other company, for that matter) is not usually considered to create a nexus in the state.

So under the law as it seemed to exist at the time Amazon opened the distribution center, it was not obligated to collect sales tax on its sales in TX.
But according to an administrative panel in TX, this is not the case...and Amazon is liable not just to collect taxes in the future, but to pay for all of the taxes it should have collected over the past 5 years.

So that's why they're disgruntled.

Note that this hasn't gone to an actual court yet, so the actual ruling could change -but that's where it is now.

[HarryT]

Thank you; if payment of back-taxes is involved, that would certainly explain it! If that is the case, though, would closing the distribution centre help them? Wouldn't they still be liable for tax payments during the time that it was open, even if they closed it?

[stephanievoid]

Bookstores are killing themselves, but the publishing industry is contributing a few stabs.
They both are clinging to the way they operated in times past. In order to survive, they need to update their ways of doing everything. They must learn to make e-readers and wildly successful indie authors an ally.

Barnes and Noble probably has the best chance of doing this, since the Nook is pretty widespread.

[Andrew H.]

Originally Posted by HarryT

Thank you; if payment of back-taxes is involved, that would certainly explain it! If that is the case, though, would closing the distribution centre help them? Wouldn't they still be liable for tax payments during the time that it was open, even if they closed it?

Closing the distribution center won't help with the uncollected taxes if their liability is ultimately sustained, but it will prevent ongoing obligations - if Texas's theory is correct, every sale that that they make in Texas will add to what they owe, so that would, presumably be the reason for closing the distribution center now.

[Andrew H.]

Originally Posted by stephanievoid

Bookstores are killing themselves, but the publishing industry is contributing a few stabs.
They both are clinging to the way they operated in times past. In order to survive, they need to update their ways of doing everything. They must learn to make e-readers and wildly successful indie authors an ally.

Barnes and Noble probably has the best chance of doing this, since the Nook is pretty widespread.

How do you propose that they make e-readers and the (very few) indie authors an ally, when one of the greatest advantages of the e-reader is that you don't have to go to the bookstore?

Also, bookstores biggest problem doesn't come from e-books (yet); it comes from Amazon, and to a lesser extent from supermarkets, etc. selling bestsellers.

[rhadin]

Originally Posted by HarryT

I'm a little puzzled by this. Why should Amazon care whether or not they collect sales tax? They obviously have the systems in place to collect it, so what's the problem?

It's a big competitive price advantage for Amazon. If I go into a Best Buy to buy a televesion, I have to pay sales tax. If I order it from Amazon, depending on where I live, I don't. Savings to me can be a couple of hundred dollars (I pay 8.75%).

Similarly, every time I go into Barnes & Noble or order from B&N online, I need to pay the sales tax, but not if I order (again, depe3nding on where I live) from Amazon.

The consequence is that Amazon always has a lower price even if the selling price is exactly the same as a competitors.

FWIW, when a store collects sales tax, the store also gets to keep a percentage of it to defray overhead and costs. So it isn't a matter of out of pocket expense as much as it is the competitive advantage Amazon gets.

[rhadin]

Originally Posted by HarryT

Am I right in thinking that the "rule" is that they have to charge sales tax if they have a physical presence in a state? If that's so, and they have an office somewhere in Texas, it seems pretty unambiguous that they would then need to charge sales tax in Texas. Where's the "loophole" that allows them not to do so?

Yes you are right but the loophole is that Amazon opened the distribution center as a wholly owned subsidiary that is a separate corporation. Because it is a distribution center, which doesn't actually sell anything, and because it is a wholly separate corporation although wholly owned by Amazon, Amazon claims it doesn't have a "presence" in Texas.

[kjk]

Originally Posted by rhadin

It's a big competitive price advantage for Amazon. If I go into a Best Buy to buy a televesion, I have to pay sales tax. If I order it from Amazon, depending on where I live, I don't. Savings to me can be a couple of hundred dollars (I pay 8.75%).

Similarly, every time I go into Barnes & Noble or order from B&N online, I need to pay the sales tax, but not if I order (again, depe3nding on where I live) from Amazon.

The consequence is that Amazon always has a lower price even if the selling price is exactly the same as a competitors.

FWIW, when a store collects sales tax, the store also gets to keep a percentage of it to defray overhead and costs. So it isn't a matter of out of pocket expense as much as it is the competitive advantage Amazon gets.

Agreed. In SF, sales tax is 9.5%, so Amazon has a big advantage here as well, for now (California is also fighting this issue).

I think for Amazon it is seen as both a competitive and a convenience issue-the convenience is that with their Prime membership, the price people see is the price they actually pay, and they get free 2 day shipping too. It looks pretty convenient

[HarryT]

Originally Posted by kjk

I think for Amazon it is seen as both a competitive and a convenience issue-the convenience is that with their Prime membership, the price people see is the price they actually pay, and they get free 2 day shipping too. It looks pretty convenient

Payment (or otherwise) of tax doesn't have to mean that this is no longer the case, though. Eg, here in the UK, Amazon's displayed prices include 20% VAT. The price displayed is the price we pay.

[queentess]

Originally Posted by rhadin

FWIW, when a store collects sales tax, the store also gets to keep a percentage of it to defray overhead and costs. So it isn't a matter of out of pocket expense as much as it is the competitive advantage Amazon gets.

...really? I've not had to do retail (business to individual) accounting, but all the industries I've been in (business to business), you have to remit 100% of the sales tax you collect. Calculating the tax and collecting it is a burden the company has to bear.

[darylbrayman]

Every Sunday I used to head to my local Chapters (the Canadian version of B&N) I would spend an hour or so pursuing the isles and leave with 3-4 novels and a couple of hobby/coffee table type books. Oh, and a much lighter wallet.

Once I got my ereader, that tradition ended. I still go to Chapters when I need a woodworking or travel book and I still end up leaving with a much lighter wallet. But now I snap a few pictures with my cell phone of the novels I want and download them when I get home. Usually I order from Kobo which is owned by Chapter so no loss to them. Well to the corporate them, not to the sales clerks in the brick and mortar store.

There will always be a need for brick and mortar stores, I can't see myself spending $50+ on a hobby/coffee table style book until I've actually held it in my hands. And once I'm holding it, if it's what I want I'm going to buy it, right now, not go home and order it, no matter what the savings. Ebooks are fine as I can download then right away, instant gratification is very important to me :-)

Last point, someone mentioned earlier that with overdrive, that there is no more need for libraries. Forget all the other arguments about no internet connections and the cost of ereaders. How about the cost to young readers. My mother used to take my siblings and I to the library weekly and let us loose. This is where I discovered my life long love affair with reading. I would spend as much time as I could comparing this book to that, as children we were limited in the amount of books we could take home. If you picked a bad book (if there really is such a thing) you were stuck with it all week. Part of growing up was graduating to an adult library card. Oh the treasures there were upstairs in the grownup stacks.

If my parents had passed me a kindle or a nook and said here pick a book, it won't have pictures and your selection is extremely limited. Well you can work it out. Are there even going to be readers in our future. Are we the last generations of recreational readers?

[wyndslash]

In the future there will be no more humans :P