State sales tax on internet purchases is back on the table

[meierlde]

I just looked at the spreadsheet download from Amazon. I occasionally send gifts to TN and, for those purchases, the tax is at the rate in the city in TN I send the gift to. For the ones delivered to me, the tax is at my city's rate. I thought Amazon charged tax on everything sent to me since they are WA state too but I see some exceptions where no tax was paid. They have columns that seem to be for assessing the taxability of the item but all three tax exemption columns are empty. I bought some food and food should be exempt in WA but the columns were empty for these too. (Maybe the columns were provided for the buyer to fill out.) I'd be willing to bet that, if I checked it, the items taxed are those that are linked to Amazon's "fulfillment center" for returns since they are the main trackers of the merchandise.

Check who the seller of the item is in many cases it is an
Amazon associate not amazon.com. If it is sold by Amazon.com you pay sales tax, but if not you may not, some items you find listed as fulfilled by Amazon, and others you find that Amazon serves as an order taker only.

 

[travelover]

......... If we want to have the jobs and benefits of local business in our state, then they need a level playing field to compete..............

I don't buy the "support local business" argument. Anyone can also be in the internet sales business if they want to be.

 

[pb4uski]

Perhaps, but a lot of our local small business people don't have the skills necessary to set up and run an internet sales business and in some cases, probably not the time either.... but having to charge sales tax puts them at a disadvantage.

 

[skipro33]

I don't think the local taxes are required to be paid. If so, then if I went on a trip to, say, San Francisco but lived in Sacramento, I would have to pay a different tax? No, I just pay what ever the local tax is no matter where I hang my hat. If went to another state and bought something, paid the sales tax, how is that any different? Would I then need to declare that on my state income tax? Why can't internet sales be the same as in-person/out-of-state purchase and just pay the prevailing tax of the locale I'm buying from? Tax should be based on where you are buying it from since that's where the infrastructure is needing the financial support. Why should California collect a tax on a product that was solely marketed in another state? What did California incur to justify the expense of a tax for that?

 

[upset264]

Amazon charges sales tax here in Connecticut except for items that come from a third party vendor.

Unrelated to that, despite the convenience and huge selection, I'm avoiding Amazon. Two things influenced me to do this. First of all CVS is buying out Aetna. One of the primary reasons is to compete with Amazon. How's that, you might ask? The article said Amazon had obtained licensing in 14 states to sell pharmaceuticals and was applying in other states. Secondly, the Kmart store one town over recently closed. It was a nice store, clean and convenient. I only went there occasionally so I guess I'm part of the problem but it's a shame. These stores pay taxes in the community and employ people. Maybe they're not high end jobs but they're jobs.

For me, Amazon is getting too big.

 

[pb4uski]

I don't think the local taxes are required to be paid. If so, then if I went on a trip to, say, San Francisco but lived in Sacramento, I would have to pay a different tax? No, I just pay what ever the local tax is no matter where I hang my hat. If went to another state and bought something, paid the sales tax, how is that any different? Would I then need to declare that on my state income tax? Why can't internet sales be the same as in-person/out-of-state purchase and just pay the prevailing tax of the locale I'm buying from? Tax should be based on where you are buying it from since that's where the infrastructure is needing the financial support. Why should California collect a tax on a product that was solely marketed in another state? What did California incur to justify the expense of a tax for that?

Interesting idea.... and I like the analogy to the sales tax that would be paid if it was an in-person out-of-state purchase. Only thing is, if you pay less than what your home state charges (for example if you did an internet purchase from a NH vendor where there is no sales tax) then you would in theory owe your home state use tax.

But that idea might be a practical way to reduce the burden on small e-commerce businesses. Or perhaps require e-commerce business to collect state sales taxes but not local or city sales taxes so they only have 50 jurisdictions to deal with.

 

[GrayHare]

Why can't internet sales be the same as in-person/out-of-state purchase and just pay the prevailing tax of the locale I'm buying from?

Reasonable idea but then big sellers like Amazon would move their operations to states with no sales tax.

 

[meierlde]

Reasonable idea but then big sellers like Amazon would move their operations to states with no sales tax.

Except that with the idea of same day delivery Amazon is forced to have a physical presence in most states.

 

[travelover]

Perhaps, but a lot of our local small business people don't have the skills necessary to set up and run an internet sales business and in some cases, probably not the time either.... but having to charge sales tax puts them at a disadvantage.

Not having the skills or the time is not my problem. Businesses are supposed to be rewarded for merit, they are not a charity. And every business is a local business to the people that live nearby. "Buy local" smacks of tribalism to me.

 

[aja8888]

"Buy local" smacks of tribalism to me.

On a larger basis, so is statehood.

 

[braumeister]

Why can't internet sales be the same as in-person/out-of-state purchase and just pay the prevailing tax of the locale I'm buying from? Tax should be based on where you are buying it from since that's where the infrastructure is needing the financial support.

Exactly what I said in post #23:

shouldn't the buyer pay the applicable sales tax of the seller's location?

Wouldn't that be the simplest and fairest way?
AFAIK, the only reason this situation exists is so online sellers can offer "tax free" sales to out of state buyers and thereby compete on total price.

 

[Senator]

Not having the skills or the time is not my problem. Businesses are supposed to be rewarded for merit, they are not a charity. And every business is a local business to the people that live nearby. "Buy local" smacks of tribalism to me.

100% correct. And when the businesses go out of business, you have to pick up the taxes they used to pay...

 

[pb4uski]

Not having the skills or the time is not my problem. Businesses are supposed to be rewarded for merit, they are not a charity. And every business is a local business to the people that live nearby. "Buy local" smacks of tribalism to me.

I never said anything about buying local... though I am interested in fairness.

A local merchant, Gotham Widgets, should not be at a competitive disadvantage because if Joe Smoe from Gotham buys a widget in his store he has to charge $10 in sales tax or if Joe Smoe orders a widget from from Gotham Widgets online they have to charge $10 in sales tax yet if Joe Smoe orders it from ABC E-Commerce then he can save $10.

I don't give a tinker's damn whether Joe Smoe buys widgets from Gotham or ABC E-Commerce as long as there is a level playing field with respect to sales tax.... if based on price, service or whatever ABC E-Commerce wins Joe's business then that is fine with me, just don't tilt the playing field against the local merchants.

 

[gindie]

we already pay sales tax on amazon purchases

Be careful. I thought I had heard that as well. However, at tax time last year when I went through all the Amazon purchases I made, I found that only about half of them had charged sales tax. Seemed like the ones that Amazon fulfilled had sales tax, but the ones that were fulfilled by others may not have.

 

[meierlde]

Perhaps, but a lot of our local small business people don't have the skills necessary to set up and run an internet sales business and in some cases, probably not the time either.... but having to charge sales tax puts them at a disadvantage.

The main issue would probably be classifying the item. Since shipping works on zip+4 knowing the items product code, the address to ship to and possibly the shipping charge as well (depends on state), plus the amount of the sale the system would do all the work. The more complex systems accumulate totals per sales tax district and do the filing for you. (For a fee of course) but they do take care of the rest. If your on a web site then that can be integrated with the checkout system. If phone orders you would just have to type the data in but then to get a shipping label printed you have to do a good bit of the typing. A merchant just needs to hire the right software to get the job done.

 

[travelover]

......... just don't tilt the playing field against the local merchants.

The playing field is already tilted because on-line merchants have to deal with the costs of shipping twice (to and from) whereas the local merchants can take advantage of bulk shipping to their store.

 

[USGrant1962]

Tax should be based on where you are buying it from since that's where the infrastructure is needing the financial support. Why should California collect a tax on a product that was solely marketed in another state? What did California incur to justify the expense of a tax for that?

This concept is based on the myth that businesses pay taxes. They do not, they only collect taxes from either customers, employees or owners. There is no other source of money. Sales tax is collected from the customer and remitted to the state - the business really has no role other than as tax collector.

Voters of each state, through their elected representatives, enact sales taxes and other taxes on themselves. For example, California sales tax is a tax on California residents and visitors that goes into the general fund to be spent on whatever - it has no direct correlation with "the infrastructure" and if you look at the CA budget, little of it goes there.

I enjoy when out of state online vendors do not collect sales tax, but if they must it should be for my state. But anyway, that is how it currently works and the only question up for debate is the practicality of enforcing tax collection across state lines for the location of the purchaser/customer.

 

[Montecfo]

The playing field is already tilted because on-line merchants have to deal with the costs of shipping twice (to and from) whereas the local merchants can take advantage of bulk shipping to their store.

Yes. Not to mention customers can touch examine and buy goods from local retailers at any time. They do not buy based on pictures and then require the have to wait for shipping ad the do with online sellers.

Notice also all major brick and mortar stores are also internet sellers.

Sales tax collection is a small piece of the puzzle in reality.

 

[CRLLS]

This concept is based on the myth that businesses pay taxes. They do not, they only collect taxes from either customers, employees or owners. There is no other source of money. Sales tax is collected from the customer and remitted to the state - the business really has no role other than as tax collector.

Voters of each state, through their elected representatives, enact sales taxes and other taxes on themselves. For example, California sales tax is a tax on California residents and visitors that goes into the general fund to be spent on whatever - it has no direct correlation with "the infrastructure" and if you look at the CA budget, little of it goes there.

I enjoy when out of state online vendors do not collect sales tax, but if they must it should be for my state. But anyway, that is how it currently works and the only question up for debate is the practicality of enforcing tax collection across state lines for the location of the purchaser/customer.

A couple of other data points.

I know that when I buy a vehicle in Illinois and the dealer "collects" the sales tax, the state gives the dealer a break. The dealer gets to keep a small portion of that. I'm not sure if retail places also get to keep some. of the taxes collected from sales.

If I order from Amazon.com and the "seller" is out of state but the order is "fulfilled" by an in-state Amazon warehouse, sales tax is not added to my order. Only if I buy from Amazon. I bought one item from Amazon.com where the seller was in the UK and it was shipped from the UK. I wonder what the "state tax" would be if it were based on the seller's location.

State sales taxes can be confusing.

 

[Tadpole]

We've had Sears and Penny's catalogs, book clubs, magazines, and other items not purchased at brick and mortar for my entire life. Which state got the tax? The state of the warehouse, publisher, etc. or the state of the buyer? How was it collected?

 

[Senator]

I had an interesting conversation with a friend of mine regarding this. He was talking to one of the MN State Auditors, and she said the State of MN already gets a data feed from Amazon.

I am not sure what they do with it, but I suspect some people may be getting letters saying how much they owe in use tax to eh State of MN already.

 

[Another Reader]

Does Amazon not charge sales tax in Minnesota? If they do, it's only the non-Amazon sellers that don't charge it. Going to be a lot less revenue to chase if that's the case.

 

[Senator]

Does Amazon not charge sales tax in Minnesota? If they do, it's only the non-Amazon sellers that don't charge it. Going to be a lot less revenue to chase if that's the case.

Yes, Amazon does charge sales tax, and as you said the non-Amazon sellers do not.

It is MUCH less revenue, but some people probably get a lot of stuff.