Farewell to Internet's Tax-Haven Status?: Amazon to start collecting Indiana state sales tax in 2014
Following a pattern on displays in states such as Texas and South Carolina, e-commerce giant Amazon has agreed to start collecting state sales tax in Indiana in two years' time, reports the Washington Post (full disclosure: Amazon founder Jeff Bezos is a donor to Reason Foundation, the nonprofit that publishes this website).Counties and localities that tack on increments to the state rate will be out of luck and the new arrangement will net somewhere between $75 million to $250 million for Hoosier coffers (that sort of variance is an indicator that nobody knows how much of the state's 7 percent sales tax is being left on the table).
Retailers are required by federal law to collect sales tax only in states where they have a "physical presence," i.e. a warehouse or storefront. Amazon created warehouses in Indiana in 2007 and this current development is the final act of a prior agreement.
As the biggest kid on the e-commerce block, Amazon now advocates the federal government forcing all online merchants to collect sales taxes on every sale.
Paul Misener, Amazon's vice president for global public policy, said at a news conference in the governor's office that the company supported federal legislation requiring all sales tax collections by all online companies.
"It's the only way to level the playing field for all sellers," Misener said. "It's the only way for Indiana to obtain all the sales tax revenue that is already owed."
Last fall in Reason, Veronique de Rugy explained why the push to collect state and local sales taxes in states where a business has no physical presence is a form of taxation without representation.
For any number of reasons - from basic self-interest (saving 6 percent to 8 percent off purchases that get delivered for free to my door is no small advantage) to philosophical premises (the idea that the federal government might pass legislation dictating how non-federal taxes get collected is disturbing, to say the least) - I hope that at least large parts of the Net stay tax-free. But it shouldn't suprise anyone that those days are almost certainly numbered. As the eugenics-loving, pro-involuntary-sterilization legal giant Oliver Wendell Holmes Jr. would tell you, taxes are the price we pay for civilization. Or more precisely, the amount of protetction we pay not to be thrown in jail.
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Wow, I mentioned Cracker Barrel in the last thread, and now there's a picture of a billboard for them.
That's fucking meta.
Mmm. Fried okra.
The lowest I could get on that stupid peg game was two, though. I guess I'm an ignor-a-moos.
You know you're losing your edge when you visit and you can only get down to 5.
The wife and I ate there this past Saturday, and I finally broke down and just bought the fucking peg game. It's only $3 at the front counter.
I removed the chess set on our coffee table and put that there instead, and it gets way more use than the chess board ever did.
Oh, and the package contains instructions on how to get down to only 1.
Buy a Playstation. Or a remote control helicopter. Or a pet.
Buy a chess set, or a stupid peg game. Go outside for fuck's sake.
Buy a chess set, or a stupid peg game. Go outside for fuck's sake.
Fuck outside. God didn't invent houses and playstations if he wanted us to go outside.
Or booze if he wanted us dry.
I have a playstation, and two cats and two dogs. Sometimes you just want to play a fucking peg game.
Depending on which peg game you are discussing, I, as a ute, figured out the pattern to get to 1 for every possible starting hole.
In the 15 hole triangular one, there are actually only 4 starting positions - corner, next to corner, midside, middle.
I'm only good in continuous spaces.
Amazon to start collecting sales tax in 2104?
Meh. I can live with that.
Oh, sure. Fix the typo, just to make me look bad.
2104?
the new arrangement will net somewhere between $75 million to $250 million for Hoosier coffers (that sort of variance is an indicator that nobody knows how much of the state's 7 percent sales tax is being left on the table).
Wow. Amazon sells $3.5BB in Indiana alone? I am impress.
Success, how do they work?!
God, I wish I knew.
Take government guaranteed loans secured by those who donated to Obama!
Duh!!
I like the idea of a "warhouse".
drinking beer at long tables as we sharpen our swords?
I just want to say that address parsing is a great calling, and those who succeed at it are among the most intelligent and virile imaginable. If I had a vagina I would happily offer it to them.
However... Walmart, Barnes and Noble, Apple, etc, already collect sales tax for online purchases. So it's not impossible.
So it's not impossible for large national firms that already have a presence in a state to collect sales tax on online as well as storefront purchases.
May not scale down.
You do have a vagina, Tulpy-poo. Give it to me.
Retailers are required by federal law to collect sales tax only in states where they have a "physical presence," i.e. a warehouse or storefront. Amazon created warehouses in Indiana in 2007 and this current development is the final act of a prior agreement.
iirc that was a SCOTUS decision that said they didn't have to collect sales tax where they didn't have a physical presence. The requirement that they pay up if they have a physical presence is a matter of state law (ie, men with guns go to the physical presence if they don't pay). There is no federal law regarding sales taxes.
"saving 6 percent to 8 percent off purchases that get delivered for free to my door is no small advantage"
You know, not everything on Amazon comes with free shipping.
Vietnamese girlfriends always want you to pay airfare and all that shit.
Being half Vietnamese I should probably be offended by that, but I'm far too busy laughing my ass off.
Being half Vietnamese I should probably be offended by that, but I'm far too busy laughing my ass off.
It's surprising it's taken this long, but still...goddammit.
Is it just me, or is this pretty much a non-story? They have a physical presence in IN and they're bringing themselves into compliance with the law as it's stood for decades. It's not a new development.
I think it's setting the stage of a bigger story. I can't wait to hear about the vendors and competitors telling Amazon to STFU.
Sure, but from Amazon's POV, they're uniquely screwed because their business model includes acting as a transparent middleman for buyers and sellers in different states. But some of the states are trying to say that if Amazon offers products from any seller in their state then every purchase on Amazon is subject to sales tax in their state.
The story is Amazon trying to make those without physical presence collect the tax.
Then Gilooly should have put it in the headline.
As the biggest kid on the e-commerce block, Amazon now advocates the federal government forcing all online merchants to collect sales taxes on every sale.
I like how Reason (rightly) complains about abuse of the commerce clause...but then when Congress actually might do something that pretty explicitly falls under the commerce clause, they complain about that too.
The taxing power and the regulatory power have always been regarded as distinct. I'm not sure that Congress expanding the taxing power of the states counts as regulating commerce.
The states already have the power to tax online sales; they just can't force out-of-state merchants to collect for them.
Forcing retailers who mail their wares to comply with the tax laws of the states they're mailing to is the epitome of interstate commerce regulation.
+1 for a damn good point.
Actually, I don't think states even have the authority to levy taxes on out-of-state merchants, Tulpa. I think they only have that authority over merchants with a physical presence in-state.
I don't think we're just talking about giving states the power to enforce their existing tax laws. I think we're talking about giving states much broader taxing authority.
And Congress giving states broader taxing authority, or even broader authority to enforce existing taxes, does not strike me as regulating commerce. Taxing and regulating are not the same thing.
There's a good argument that the affiliate nexus statutes are unconstitutional. However, I think the Amazons of the world are afraid to push too hard, being concerned about the courts doing pretty much anything to ensure states get their access to revenue.
Actually, I don't think states even have the authority to levy taxes on out-of-state merchants, Tulpa.
The sales tax isn't a tax on retailers, it's a tax on purchasers.
The sales tax isn't a tax on retailers, it's a tax on purchasers.
I'll pick this thought up down below.
Taxing and regulating are not the same thing.
I don't think you want to go there. Congress' taxation power is much broader than their regulation power:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States
But we're not talking about Congress taxing anybody. We're talking about Congress giving states the power to tax outside their jurisdictions. I don't think Congress has the power to do that under either clause.
This... Congress isn't laying a tax. Indiana is laying a tax and telling someone in Seattle to collect it. See my post below about commerce clause.
My reading of the commerce clause is more like Congress could tell Indiana to STFU because it's interfering with interstate commerce.
Last fall in Reason, Veronique de Rugy explained why the push to collect state and local sales taxes in states where a business has no physical presence is a form of taxation without representation.
Um, what? Even assuming we consider the sales tax to be a tax on retailers, rather than purchasers, which is debatable, do Apple and B&N and Walmart get representation in the states where they have brick and mortar stores? No.
"do Apple and B&N and Walmart get representation in the states where they have brick and mortar stores? No Yes.
They get it everytime they donate to the jurisdiction's politicians.
That's not really representation, but if it were, then it's open to purely online sellers too.
Thankfully if it gets real bad I live next to Delaware. Unfortunately that still means I live in Maryland.
I don't blame Amazon for giving up the fight they will inevitably lose.
But to join The Party and become a mouthpiece for the state, well, FUCK YOU AMAZON.
I've been a huge fan of the place for years and I've spent thousands of dollars there. No more.
Indiana thanks you.
There's a real issue about whether states can enforce their sales taxes on out-of-state vendors. As I recall, a state cannot exert jurisdiction over an out-of-state defendant just because the defendant's products would up in that state; the defendant must "purposefull avail" themselves of the state's benefits and protections.
Long-arm jurisdiction is an unholy mess, but I'm not at all sure that CA can actually enforce its tax code against me just because I shipped a widget to a CA address.
I'm not at all sure that CA can actually enforce its tax code against me just because I shipped a widget to a CA address.
Under current law, no. But Congress can make you because you're engaging in interstate commerce.
You know, the actual purpose of the commerce clause.
That sounds like an accounting nightmare which will do nothing to add to the economy, and a whole shitload to take away from it.
An accounting nightmare that several companies already deal with.
I do like the original idea Amazon floated, of a federal "e-commerce tax" at a uniform rate across the nation which would be reimbursed to the states. It would cut down on the paperwork, state govts would be kept from starving, and local merchants would have this govt-created competitive disadvantage mostly removed.
Somehow I doubt that this is the purpose of the commerce clause. Say I order something on Amazon from Minnesota (my home state) and have it shipped to California (the shithole I currently live in). If CA can levy sales taxes, it stands to reason that MN can as well. So I'm now paying 15.75% (San Mateo County's 9.75% + Hennepin's 6%) sales tax to be split between two states. I hardly think that Madison would have liked this application.
Sorry. I misinterpreted Quill v. North Dakota. Only 9.75%, I guess.
Under current law, no. But Congress can make you because you're engaging in interstate commerce.
You know, the actual purpose of the commerce clause.
Arguably not. The purpose of the commerce clause was to keep states from ganging up on eachother, or keep them from colluding in anti-trade policies. Indiana is the one doing the "making", Amazon is merely doing the agreeing (and asking Congress to start doing the "making").
The purpose of the commerce clause was to keep states from ganging up on eachother, or keep them from colluding in anti-trade policies.
That seems dubious to me, since the Compact clause in Art I Sec 10 already prevents this.
Amazon now advocates the federal government forcing all online merchants to collect sales taxes on every sale.
No kidding.
I'd like to bitch about this, but I can't quite get energized. Sales tax isn't really something targeted at businesses, even though it does cost them money to comply.
Sales tax is a way to soak citizens, not retailers. So if you buy something, anything, online and it's delivered to your house, you should pay the sales tax on that purchase.
Sales tax is one of the less intrusive forms of raising revenue for states, and you can control your level of taxation by limiting your purchases. It's also a great way for states to compete with each other.
But if this is the new normal, I would support any federal legislation that does away with the hideously complex local/municipal/super-special reserve sales tax tweaks that make sales tax compliance such a gigantic pain in the ass.
Um, no. The federal government has no business enforcing state regulation. That's a big overreach I don't care for the feds to get a toehold in.
I'm just annoyed at dealing with hugely complicated micro-local sales tax. You either do a bunch of work and eventually fall afoul of the law; or you pay an ungodly amount of money for sales tax compliance software and still fall afoul of the law.
I'd much rather have the Feds boss the states around. I recognize that is my inner authoritarian coming out.
So if CA decides to ban shipping of Amazon products across its borders, you'd be okey dokey with the feds not interfering there, too.
Enforcing state guidelines and regulating commerce among the several states are two different things. Your hypothetical falls within the bounds of Article I, Section 8, Clause 3 of the US constitution. Now you're being obtuse.
Congress can choose any mode of regulation they want. If they want to create a Department of Regulating Interstate Commerce and entrust the regulation-writing to them, they can do so. If they want to let the US Chamber of Commerce make the rules, they can do so.
That would be the the one thing Congress could do under the commerce clause: keep free trade moving between a state that blocks commerce between two states.
But that's not what the clause says. Regulation != facilitation.
You guys are just as bad as the liberals with writing shit into the document when it's not there.
The document needs interpretation at times, yes, and that's when you go to the history to glean what the framers meant when they said admittedly vague stuff:
Here's a good, brief text:
http://lawreview.uchicago.edu/.....merce.html
Excerpt:
The elipses at the end which I placed talked about limiting trade from other nations to promote the domestic economy.
So the only place where Congress was really given free range to restrict commerce (much to this libertarians chagrin) was in the area of international trade.
So "us guys" are not the same as liberals. I read the commerce clause more similarly to Professor Barnett.
While you may still disagree with me, please don't suggest I just make shit up. I endeavor (and often fail- but I endeavor) to understand the constitution's deeper meanings.
I never suggest shit like, "Well, if he drove across state lines and bought a pack of razzles while on his road trip, we can regulate his sugar intake". That's the exclusive realm of the liberal.
"Sales tax is a way to soak citizens, not retailers."
Tell that to your area restaurants.
But I daresay, if it's aimed at buyers and not sellers, why is it called a Sales tax and not a Purchase tax?
A sales tax should be charged on any eligible transaction that occurs in the state. When my computer sends packets off to Amazon's servers, unless the servers (qua point of sale) are in the state, it's an out of state purchase.
Whether the consumer or the retailer pays the sales tax depends on the shape of the supply/demand curves.
The retailer isn't paying the tax. The consumer is paying the tax. The retailer has costs associated with collecting the tax, but that's not the same thing at all. Restaurants are the same, only they sometimes have the extra joy of collecting some bullshit "tourism" extra percentage to pay for a coliseum or something.
In the end all tax revenues come from you and me. And maybe that guy over there, with the boot for a hat.
I think the idea is that the retailer could charge a higher price if there wasn't sales tax.
It's a compelling idea, except McDonald's won't charge an extra 7% on a hamburger if the sales tax goes away.
Why? Because Burger King won't, and everybody will get fat on Whoppers instead of Big Macs.
A flat sales tax is, of all the government revenue raising ideas, the best of a bad lot, because Everybody Pays. The problem with Amazon getting away with not paying is that gives them a competitive advantage, but it's a competitive advantage that takes advantage of tax law vagaries.
To me this gets down to ensuring a level playing field. Amazon can offer lower prices than Best Buy because they don't have physical stores. That's fine. But not having to collect sales tax because LOL INTERNET is, effectively, a government sanctioned subsidy.
Well, they certainly couldn't get away with raising their prices by the full amount of sales tax, but probably some portion of the sales tax would be replaced by price increases. Price undercutting is all well and good in theory, but everyone wants to make higher profits so it probably wouldn't happen in this case.
but you're operating from the premise that a store is a store. Amazon and Best Buy can compete fairly by specializing and catering to different segments of the buying experience.
If I know what I want, exactly, I can go to Amazon and buy it cheaper and wait for delivery. If I need a consult or I need it immediately I can go to a physical store.
Online retailers not paying taxes doesn't seem any more unfair than Walmart's ability to volume buy.
Finally, if there was only a sales tax funding local governments then I could see a reasonable rational behind this. But I'm also paying income and property taxes. Of all three types only property taxes and some of the sales tax finds its way into the local coffers.
If I know what I want, exactly, I can go to Amazon and buy it cheaper and wait for delivery. If I need a consult or I need it immediately I can go to a physical store.
That may have been true back in the days of mail order catalogs, when you had to pick something out of the catalog with only the writer's blurb to go by, mail your check, and then wait for them to mail your product via the USPS.
Not with instant payment, instant access to reviews of nearly every product on Amazon, plus many other tools for researching the products online...and relatively fast UPS/FE shipping which is usually free if you order $25 worth of stuff.
There are very few circumstances where you're making a major purchase which you need immediately, or need to be fitted for, or whatever.
Online retailers not paying taxes doesn't seem any more unfair than Walmart's ability to volume buy.
One is an artificial competitive advantage created by law, while the other is an inherent part of doing business. Economies of scale have been around since the Babylonians.
According to my Tax I professor, it's called a Sales Tax to distinguish Sales from Services. Calling it a Purchase tax would not accomplish this.
But in many jurisdictions you have to pay sales tax on services.
Given the locutions that tax-hungry states go through, I don't see why they don't go full bore and argue that the physical presence doesn't matter at all. If the stated purpose of sales tax is the fund the state functions of its citizens (I'll pause for a moment so you can get done laughing) then is shouldn't matter where the money is being spent, just that a citizen of the state is spending it. Just give up that its about funding the protections for the businesses (which was always just a dodge to get them to be tax collector for the state) and treat it like any other "fuck you, pay me!" tax stream.
This is the case. But, since they cant enforce against out-of-state vendors, they require their citizens to file a use tax form with their state income taxes.
All the money gets collected already*.
*subject to the tax honesty of IN residents
Well, that's true. But I'm thinking that they just go full police state about it and require ISPs to report your purchases.
Yeah. I'll fill out my tax form in FL the day after they start forcing barbers to collect sales tax. Or charging sales tax on newspapers. Fuck them until everybody pays the squeeze, I'm avoiding it, too.
It's the only way for Indiana to obtain all the sales tax revenue that is already owed.
Bullshit. Im pretty sure every resident of IN is required to file a use tax for their out of state purchases.
I think a few of them may be, uh, underrreporting their out of state purchases. Hence, the state isn't actually obtaining the revenue they should be.
not should be - want to be.
Hooray for living 15 minutes away from tax-free New Hampshire, and for the ease of thumbing one's nose at Massholia's "use tax" laws.
Actually, in the past Amazon favored a fixed nationwide sales tax for purchases that were not subject to state sales tax (which obviously would simplify the sales tax software). The article is unclear about whether they've changed to just favoring collecting whatever sales tax applies in the customer's jurisdiction.
Just about all states have, buried somewhere in the code, a requirement that citizens pay the sales taxes if the retailer doesn't. It's been brought up repeatedly, and occasionally the states crackdown.
So, really, what we're talking about here is whether the states have the authority to order out-of-state vendors to collect sales tax for them?
Once states get the authority to order out-of-state businesses to do X, why won't they also have the authority to order them to do Y, and Z, etc. ad infinitum?
There's a real bind here. If the sales tax is "really" imposed on the citizens of the state, then we are giving states authority over businesses located out of state.
Conversely, if the tax is imposed on the business because it has the temerity to do business with local residents, what's to prevent the states from imposing a higher tax on those businesses? A lot of political incentive to do just that.
Either way, it strikes me as a very bad idea.
Once states get the authority to order out-of-state businesses to do X, why won't they also have the authority to order them to do Y, and Z, etc. ad infinitum?
Because Congress hasn't given them that authority.
For instance, could Congress pass a law saying that states could ban goods from states with lower minimum wages? I think so. It certainly falls under interstate commerce regulation.
Now, that law would be horrible in principle and nearly impossible to enforce in practice, but it would be constitutional.
Um, full faith and credit?
There are limits on the jurisdiction of states that I don't think Congress can override. Those limits are expressed (my fading recollection here) as due process limits, which is to say, Constitutional limits.
I don't think Congress could give California the authority to order a power plant in Arizona to stop burning coal, for example. Congress can issue that order, but it can't give California the authority to issue that order.
Similarly, Congress could tax sales by out-of-state vendors, but I don't think it can give states that authority, because those vendors are outside the jurisdiction of those states.
Merely selling to people in a given state does not give that state jurisdiction over you. Something more is required.
Its not just a state putting strings on the ability to ship goods to customers in that state, either. A state can't go to an out-of-state vendor and say "We will prohibit you from shipping to our residents unless you do X and Y." Whether X is "collect sales tax for us" or "operate your plant the way we want you to." The state simply doesn't have any jurisdiction over that business to order it to do anything.
I don't think Congress could give California the authority to order a power plant in Arizona to stop burning coal, for example.
But that's not interstate commerce, unless the power plant is serving California residents directly.
A state can't go to an out-of-state vendor and say "We will prohibit you from shipping to our residents unless you do X and Y."
Well, it's not like the California state police would be going to a retailer in Florida and threatening to arrest them if they don't play ball. Force would be applied when delivery is attempted, which occurs inside California, so they're totally within their jurisdiction there.
The reason states can't do things like this is not because of lack of jurisdiction, but because of the dormant commerce clause.
However, the dormant commerce clause depends on Congressional inactivity. Congress can remove this impediment at any time and allow states to regulate interstate commerce occurring in their state.
Is this unconstitutional?
The part in bold represents Congress giving state governments the power to define what is a crime under this section.
I mean, really it doesn't give states authority over out-of-state businesses at all; it's a case of strings being attached to the ability to ship goods to customers in that state.
If Amazon doesn't like the requirements that North Dakota wants to enforce against out-of-state retailers, they're perfectly free to not sell stuff North Dakota residents.
Amazon now advocates the federal government forcing all online merchants to collect sales taxes on every sale.
Reason should take Bezos's donation and shove it in his hypocritical eye.
I worked at a major retailer in the 90s. We had to charge tax on anything shipped to a state where we had a store. That isn't new.
Here's a kicker, NYS requires I pay taxes on anything ordered out of state. If I paid tax, they want me to pay the difference between what the state charged for tax, and what NY would charge for tax.
http://www.tax.ny.gov/pdf/curr.....it201i.pdf
Check out page 33.
Now you understand why government hates non-chain retailers.
Once sales tax is applied to all internet sales, won't that allow Walmart to move in on Amazon's sales, since Amazon won't have the tax advantage anymore?
Of course, which is why the mixed online-b&m retailers like Apple, WM, B&N, etc are the biggest proponents of these laws.
But really, that advantage was an artificial one, not one that arose naturally from Amazon's business model.
So, placing yet another impediment upon commerce, and then before long they'll turn around and declare that we need another "stimulus" because people aren't consuming enough. The genius of statism shining through once again.
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