Skip to comments.Amazon cuts sales tax deals with states, not feds
Posted on 05/02/2012 7:48:49 PM PDT by DeaconBenjamin
Amazon may have just upended Congress to the chagrin of those pushing for a federal online sales tax bill.
The online retail company last week inked deals with Texas and Nevada to begin collecting sales taxes on purchases. The company has brokered seven such agreements in recent months while bills to standardize collection of Internet sales taxes nationwide are mired in politics on Capitol Hill.
That puts lobbyists and others who have been fighting for a federal bill in a quandary: If the biggest states begin to see sales tax revenue from Amazons collections, is it still worth the money and effort to get a federal bill passed?
Proponents of a federal solution are looking realistically at the congressional calendar and see few windows to advance an online sales tax bill or to attach it to a broader legislative package.
In the meantime, Amazon has negotiated with states as it says advances in technology can help with sales tax collection, but the company still supports measures for a national online sales tax bill. The debate has progressed, and it has matured, as has the legislation, said Scott Stanzel, a spokesman for Amazon.
But taxing Internet sales hasnt proved popular with members of Congress, particularly in an election year.
So Amazon has applied its own calculus to cutting deals with states, observers say. It has looked at its own plans for growth and the need to have distribution centers in many states to continue that trajectory. It also has to look at the growth of potential tax liability and legal costs.
I think they are being strategic, said Betsy Laird, a top lobbyist with the International Council of Shopping Centers. They have to make accommodations if they are going to be good corporate citizens in those states.
Whatever Amazons motives, its agreements with states to collect sales tax on purchases really changes the game, said one Internet company lobbyist. Whether you need to change the law begins to look like one segment of the retail business putting burdens on another segment.
On Friday, Amazon announced a deal with Texas to begin collecting sales tax on online purchases as of July 1. Also last week, the retail giant announced a deal with Nevada to begin collecting sales tax in 2014.
As part of deals with South Carolina and Tennessee, Amazon has sent letters to customers with the totals they spent on the site and information on how to pay the tax.
Buh Bye Amazon!
Was looking at some items on Amazon. Need to make a decision before July 1st! Will start looking around for other retail sites now.
To be fair to Amazon, they do offer free shipping in an effort to offset this stuff.
But UPS, Texas sales tax together? That’s a deal breaker.
They are going to lose a lot of money.
I cancelled 5 orders on Amazon tonight. They don’t make it easy to cancel your account. Tomorrow I’ll take care of that.
Ohio is still on the honor system, although one of the liberal papers here said Gov Kasich was considering a deal with Amazon.
It always boils down to the bottom line and urgency to acquire. Many will find a better bottom line with no urgency in the equation. Amazon will lose those sales.
Who in Texas is responsible for this? Don’t they know we already pay enough taxes?
I bought all my photographic supplies and equiptment through Amazon. Now, not another penny. I’ll buy locally.
Walmart is Amazons biggest political foe.
Happy to once in a while time things right. Just bought a couple of big screens from Amazon, no Texas Sale Tax.
Once they are hitting for the 8.25%, they lost a big incentive. Am sure they will stay big in the biz, just not as big. Of course they could cut prices to match Sam’s and Costco with sales tax.
Assuming %.50/mile driving cost and 60 miles round trip, you’ll have to spend about $500 per trip to come out ahead.
In Tennessee Amazon now sends an E mail indicating that use tax on the sale is due and must be paid directly to the state of Tennessee.
It is uncertain if the notice goes out on all transactions or only those above a certain $ threshold.
The law has been in effect for decades and businesses are subject to periodic purchase audit to determine compliance with the use tax law.
I have relatives who live a few miles from that mall so I combine shopping trips with visits.I certainly don't buy *everything* up there,mostly expensive stuff like TV's,PC's etc.I've increased the amount of money I spend there since Coupe Deval (Massachusetts Governor and *very* close pal of Osama Obama) raised the sales tax by about 40% a couple of years ago.
I’m sure you already figured this out.
My point was that a lot of people think they save money driving to avoid paying sales tax when they really don’t.
I have a coworker who drives 50 miles round-trip to cross the state line and save a few cents on gas price. No way he breaks even, but he isn’t interested in hearing the numbers.
Not likely. People aren't shopping there because there's no sales tax. They shop there because the prices are lower than bricks and mortar stores, it is convenient to shop (never closes, and I can buy whatever I want from my iPad sitting on my couch), and if you're a Prime member, everything comes with two day shipping.
Viola! New lawnmower, delivered right to my door in two days--for free--and I never have to leave the house. I don't have to drive to the mall, I don't have to worry about whether the box will fit in my car, I don't have to worry about getting my kids together. And Amazon does all that for less than the price of what I can buy it for at Lowes.
Sales tax? Pfft. Who cares?
It will take a couple of years, but this will be painful to Amazon, as smaller, specialized outfits start to pop up that don't have multiple-state bricks and mortar locations.
I agree about the convenience, but it remains to be seen whether people will PAY for that convenience. Amazon is not always the lowest price. If you will pay for the convenience, and many will, they may do fine. But many people also look at price and in high sales tax areas that could make or break a sale.