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post #31 of 45
5/29/08 at 12:52am

Re: Amazon To Charge NY Sales Tax June 1

I cannot comment on this NY situation with any authority or knowledge, but in the rest of the world, sales tax (if they want to make a difference and have the means) is based on where the buyer lives.

E.g. a US citizen buying stuff on his/her visit in Europe where 'everyone' pays VAT (Value Added Tax, a complicated system), can get it "tax-free" (through a system devised to exclude misuse). Also, if you order on-line from Europe, usually the vendor will not add VAT.

On the other hand, when I buy stuff outside of Europe, VAT will be added by the customs department (and I will have to pay it at the door when the package is delivered). If I buy from a vendor inside Europe (the Union), VAT will be collected by the vendor immediately (as they are required to do).


Cees
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post #32 of 45
5/29/08 at 9:42am

Re: Amazon To Charge NY Sales Tax June 1

In the United States, sales tax is charged based on where the seller is located. If they are in different states, ordinarily the seller does not have to collect the sales tax, but the buyer may be liable for use tax in his home state.

The New York law is unusual in that there is collection of sales tax based on the buyer being a New York resident, even though Amazon is not (I think they have resident status in Washington, North Dakota and one other state that escapes me). But Amazon has as I understand it agreed to collect in the future because the NY law has an amnesty provision for back taxes.

It should be noted that even though they're making noises against the NY law and apparently intend to challenge it, Amazon is a strong supporter of the Streamlined Sales Tax proposal, which would bring numerous states into line on what's taxable and what's not, and make it possible to collect sales tax on a more national basis. I suspect they support it largely because there are attractive incentives to online retailers to do so; they get a cut of the tax collections.
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post #33 of 45
5/29/08 at 11:02am

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Mark Zimmer
In the United States, sales tax is charged based on where the seller is located.
If that were so, then Amazon would be "charging" Washington sales tax on every sale. Obviously that's not the case.

The formula has two parts: The tax is charged based upon the buyer's location (or residence, in the case of use tax); it is collected based upon the seller's location. If the seller has no presence in the taxing jurisdiction, it's not obliged to collect sales tax on behalf of that jurisdiction, and the obligation falls upon the purchaser to report and pay use tax.

Hardly anyone bothers to pay the use tax on out-of-state purchases, which is why states are desperate to find ways to make mail-order and online vendors collect it as sales tax at the time of purchase. The current fight is over whether NY's revised definition of "presence" is constitutionally sufficient to impose that obligation on Amazon.

M.
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post #34 of 45
5/29/08 at 12:03pm

Re: Amazon To Charge NY Sales Tax June 1

Seems like if states seriously want/need to collect sales tax on out-of-state purchases, they need to overhaul the overall system, not just try to create new patchwork type laws that would probably just either open up new loopholes *or* be too draconian to be acceptable (or *both*!).

_Man_
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post #35 of 45
5/29/08 at 8:31pm
Thread Starter 

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Man-Fai Wong
Seems like if states seriously want/need to collect sales tax on out-of-state purchases, they need to overhaul the overall system, not just try to create new patchwork type laws that would probably just either open up new loopholes *or* be too draconian to be acceptable (or *both*!).

To appreciate the complexities involved, take a look at the myriad of approaches to sales tax taken by the 45 states which have sales taxes. In addition to state sales taxes, there are county sales taxes and city sales taxes. Some jurisidictions tax grocery sales, some do not. Some jurisdictions tax clothing sales, some do not. On mail order sales, some states tax shipping and handling charges, some do not.

Sales taxes in the United States - Wikipedia, the free encyclopedia

Connecticut charges no sales tax on clothing items which cost $50 or less, but items which cost more are subject to sales tax. New York State charges sales tax on clothing, but New York City does not. Some New York counties have clothing sales tax "holidays" once a year.

A streamlined, uniform approach to sales tax would not only require the assent of the states, but also a multitude of county and local jurisdictions.
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post #36 of 45
5/30/08 at 8:00am

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Richard Gallagher

A streamlined, uniform approach to sales tax would not only require the assent of the states, but also a multitude of county and local jurisdictions.

And in all likelihood the consent of Congress.

One thing that helps on the local level is that county and local jurisdictions in many states (if not all) are subject to the state legislature's dictates and can be forced into line if need be, though that carries with it its own set of issues.
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post #37 of 45
5/30/08 at 7:54pm

Re: Amazon To Charge NY Sales Tax June 1

Taxation at the federal level has its own problem, the Constitution. The Constitution permits a head-count federal tax. Art. I sec. 8 para 1 states in pertinent part "The Congress shall have Power To lay and collect Taxes, Duties, Imposts, and Excises.....but all Duties, Imposts and Excises shall be uniform throughout the United States..." Note "taxes" are not included in the second phrase. Later on in Art. I sec. 9 para. 4, it goes on to state "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." Finally, Art. I sec. 9 para. states "No Tax of Duty shall be laid on Articles exported from any State."

Around 1850 Congress tried to impose an income tax, but the Supremes torpedoed it. Hence in 1913 the 16th Amendment was enacted giving Congress specific authority collect income taxes.

The sum of all this means that any "federal sales tax" would likely be unconstitutional. The typical remedy would be through a cabal of law professors in smoke-filled rooms, know as the commission on uniform state laws, who could write a uniform state sales tax law. Copies would be sent to the various state legislatures who would then rubber-stamp their approval. This is how the Uniform Commercial Code got enacted. Ask Mike Reuben for more on this concept.
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post #38 of 45
5/30/08 at 9:32pm

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Dennis Nicholls
Ask Mike Reuben for more on this concept.
Oh no you don't, counsellor! You opened the door; you field the questions. The UCC and I have never been on good terms.

M.
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post #39 of 45
5/31/08 at 8:02am

Re: Amazon To Charge NY Sales Tax June 1

The States' have so many varying statutes and some have localities that tax too, it is probably nearly impossible that there will ever be uniform statutes. Taxing jurisdictions rely on their taxes to pay for the services they provide. In jurisdictions that may not impose a sales tax, it may have a higher personal income tax. Some states have personal property taxes and their sales tax rate may be lower. Localities that have their own taxes (e.g. Colorado, Arizona) pay for some things in their budgets from the tax collections that other jurisdictions have provided by the State somewhere else. They've tried many times to reach agreements going back 40 years. the latest they have is the - Streamlined Sales Tax Project

It's goal is to promote uniformity and make it easier to do business in the State. States' that participate fill out a table of taxable and non-taxable items and a contact in the State so that a business has a little easier time than searching through voluminous statutes. It probably helps the small to moderate sized businesses more that may not have an in-house tax staff and subscriptions to tax services which can be a costly investment.
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post #40 of 45
5/31/08 at 3:23pm

Re: Amazon To Charge NY Sales Tax June 1

Hehheh. Then would it not be easier if states just basically collect it as a custom duty w/ the help of the few different shipping carriers, including the USPS? That's what's generally done for similar purpose when merchandise is imported to any particular country that wants to collect such, no? Basically, the states (of the USA) are more like individual countries in many regards, including this one, so seems like that would probably be the most practicable way to address this problem, no?

Of course, it's not a fail-proof approach, but I'm guessing most states would just be happy to collect those taxes for a majority of interstate sales done online, especially as the online businesses continue to grow greatly...

_Man_
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post #41 of 45
5/31/08 at 3:31pm

Re: Amazon To Charge NY Sales Tax June 1

Quote:
The UCC and I have never been on good terms.

I thought you were a commercial litigator, with a copy of White & Summers on your nightstand.
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post #42 of 45
5/31/08 at 9:09pm

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Phil A
Many states have stuck lines on their personal income tax returns for use tax due on out-of-state purchases and believe it or not they get some voluntary revenue. NY has always been aggressive that way.

Quote:
Originally Posted by Dennis Nicholls
I do this. The problem is that you sign your return under penalty of perjury as being complete and accurate. A perjury rap would get me disbarred so I send in a couple of hundred miserable bucks a year in liu of trying to fight it.

And New York State included such a provision on its income tax forms a few years ago. I should check and see how much is raised each year.

This would not be the first time NY has included new revenue it wasn't sure it would receive in its state budget. Each year for the past few years, the legislature has also included a line of about $200-million dollars in revenues they say they will raise from enforcing sale tax collection on the various Native American enterprises located throughout the state. They have yet to even try to collect any of that revenue. An odd thing.
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post #43 of 45
6/1/08 at 6:58am

Re: Amazon To Charge NY Sales Tax June 1

Quote:
Originally Posted by Man-Fai Wong
Hehheh. Then would it not be easier if states just basically collect it as a custom duty w/ the help of the few different shipping carriers, including the USPS? That's what's generally done for similar purpose when merchandise is imported to any particular country that wants to collect such, no? Basically, the states (of the USA) are more like individual countries in many regards, including this one, so seems like that would probably be the most practicable way to address this problem, no?

Of course, it's not a fail-proof approach, but I'm guessing most states would just be happy to collect those taxes for a majority of interstate sales done online, especially as the online businesses continue to grow greatly...

_Man_


States have sent letters to people who have bought furniture for example in North Carolina and had it shipped to another state (or even taken down license plate nos. of people shopping in an adjacent State and sent letters). All they know at most is a few details like the weight and the shipper and the name of the transporter who they probably only stopped I'd bet since they were not properly registered for use fuel taxes. There's so many freight and shipping cos. and if they are not selling items subject to sales tax they are not required to register for sales taxes. In Europe VAT taxes are a huge part of the taxation system. There are many taxes here at the state and local level including sales and use taxes, income taxes, gross receipts taxes, real property taxes, personal property taxes, franchise taxes, specialty taxes on utilities like pole taxes, E911 fees, business license fees, fuel taxes, litter taxes, etc. Sometimes there is both a State and Local tax of the same tax type. In the US there are something like 30,000+ tax rates and over 7,000 taxing jurisdictions. That in itself presents a huge difficulty in getting a uniformity agreement. Most people I know who receive a letter from a State who stopped a freight company will just pay a few dollars to make the State go away. The State has no idea if you bought something worth $20,000 or something worth $2,000 by the weight.
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post #44 of 45
6/2/08 at 7:20am
Thread Starter 

Re: Amazon To Charge NY Sales Tax June 1

Overstock.com has now filed a lawsuit similar to the one filed by Amazon.

Overstock.com sues N.Y. over Internet tax - U.S. business - MSNBC.com
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post #45 of 45
6/2/08 at 8:35am

Re: Amazon To Charge NY Sales Tax June 1

I'm in England & buy a lot of DVDs & CDs from Amazon & Amazon Marketplace US, & as long as I keep the order to under £18, there's no VAT to pay - & if it's over £18 there's still a good chance it won't get picked up & I won't pay. Amazon can be very cheap, but they make up for it with a $12 shipping fee!
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