Travel the dunes with the LEGO� Star Wars™ Ultimate Collector Series Sancrawler™

FBTB - From Bricks To Bothans

Follow us: RSS
News? Questions? Comments? Email!

No More Amazon Affiliation

The reason FBTB came to be. We don't forget our roots.

Re: No More Amazon Affiliation

Postby pacific493 » Sun Jul 03, 2011 5:34 pm

[quote=staff]Thanks to the shortsightedness of our elected leaders in Sacramento, Amazon has terminated FBTB's affiliate relationship due to California legislature attempting to collect tax on online sales. Warning: Political rant ensuing.

Here's the situation as best I understand it: Federal tax law requires that online stores must collect sales tax if the merchant operates in a particular state. Since Amazon does not operate in the state of California, it does not have to collect nor pay state sales tax. California legislature, in an attempt to close a deficit in the budget, proposed a work around to the Federal law by taxing sales made through affiliate partners for such merchants as Amazon and Overstock.



I'm not sure if anyone else has made this point, so I apologize if it is redundant, but what California did is slightly different than what you describe above and has a much broader impact. Under a Supreme Court case from the early 1990s, states are allowed to require retailers to collect and remit sales taxes if the retailer maintains a "physical presence" in the state. Companies like Amazon and Overstock have been able to avoid collecting sales taxes in most states because they do not maintain a "physical presence" in the state. As I understand it, the California law essentially re-defined what it means to have a "physical presence" in the state of California to include marketing affiliates. In essence, under the bill recently passed, affiliates like FBTB are considered physical storefronts for Amazon, thereby allowing the state of California to require Amazon to collect and remit sales taxes not just on sales to California residents that are made through affiliates, but ALL sales to residents of California through Amazon. So, if I live in California and buy something from Amazon directly, this bill would require Amazon to collect sales tax on that purchase and remit it to California. It's a subtle, but important distinction.

And, at the end of the day, this really is about tax evasion...not by Amazon, but by consumers. We have all become accustomed to sales tax being administered through the companies from which we buy products, but the main reason that states do it this way is because it is the easiest way to collect sales tax. The states know that if they have to rely on individual tax payers to report their purchases and pay taxes on those purchases each year, it would be an administrative nightmare and would significantly impact revenue as a result of lower payments and higher enforcement costs...so the states rely on the seller to collect and report the taxes, not the purchaser. Internet sales are different because the whole physical presence issue is taken out of the equation and the seller doesn't have to collect or remit the sales taxes, but that doesn't mean that the purchaser is somehow freed from the responsibility of paying sales tax on products that they purchase in the state through electronic means. I know in my state, tax payers are required to report purchases that they have made during the year for which sales taxes were not collected and then pay taxes on those purchases. Realistically, very few people actually do this and the result is that internet retailers, particularly retailers like Amazon who offer free shipping, enjoy a competitive advantage as a result of prices that are around 7% cheaper than any local retailer can offer solely as a result of how state sales taxes are administered. Amazon may frame this as an issue of administrative burden, but it is really a competition issue...if Amazon lost the price advantage it enjoys as a result of not having to charge sales tax to customers in most states, it would lose some portion of its business in that state.

For the states, there is nothing really shifty or underhanded about this...there are sales that are being made in their states for which taxes are not being reported or paid. Laws like the one that California passed are simply an attempt to ensure that all sales are properly taxed and you don't end up with a huge retailer like Amazon undermining local businesses as a result of the competitive advantage that it enjoys as a virtual retailer vis-a-vis the collection of sales tax.
pacific493
 
Posts: 52
Joined: Sun May 23, 2010 11:56 am

Re: No More Amazon Affiliation

Postby pacific493 » Sun Jul 03, 2011 8:13 pm

Mister Ed wrote:
StoutFiles wrote:Here's one such bill: "Senate Majority Whip rooster Durbin (D-Ill.) says he plans to introduce a bill, called the Main Street Fairness Act, mandating that all businesses collect the sales tax in the state where the consumer resides. "


Although I think this is a terrible idea, and I don't support it, I can't help but notice that the way this is worded, it SHOULD mean that no matter WHERE I buy stuff, I shouldn't have to pay sales tax, since my home state has none. To interpret it any other way would mean that they weren't LEVELING the playing field, but tilting it in AGAINST on-line businesses.


Why do you think that this would tilt the playing field against on-line businesses? Internet retailers enjoy some fairly significant advantages over brick & mortar retailers as a result of their virtual nature, such as the burdens associated with operating a brick & mortar establishment. Granted, brick & mortar retailers enjoy advantages over internet retailers, such as convenience. However, I don't see how making both internet retailers and brick & mortar retailers collect and remit sales taxes in the same fashion tilts the playing field against internet retailers.
pacific493
 
Posts: 52
Joined: Sun May 23, 2010 11:56 am

Re: No More Amazon Affiliation

Postby StoutFiles » Mon Jul 04, 2011 6:51 am

pacific493 wrote:
Mister Ed wrote:
StoutFiles wrote:Here's one such bill: "Senate Majority Whip rooster Durbin (D-Ill.) says he plans to introduce a bill, called the Main Street Fairness Act, mandating that all businesses collect the sales tax in the state where the consumer resides. "


Although I think this is a terrible idea, and I don't support it, I can't help but notice that the way this is worded, it SHOULD mean that no matter WHERE I buy stuff, I shouldn't have to pay sales tax, since my home state has none. To interpret it any other way would mean that they weren't LEVELING the playing field, but tilting it in AGAINST on-line businesses.


Why do you think that this would tilt the playing field against on-line businesses? Internet retailers enjoy some fairly significant advantages over brick & mortar retailers as a result of their virtual nature, such as the burdens associated with operating a brick & mortar establishment. Granted, brick & mortar retailers enjoy advantages over internet retailers, such as convenience. However, I don't see how making both internet retailers and brick & mortar retailers collect and remit sales taxes in the same fashion tilts the playing field against internet retailers.


Many small businesses could not handle the accurate collection and payment of sales tax for all their consumers. Many consumers would find that with sales tax included the savings are less than just heading down to a local store and buying the product.
StoutFiles
 
Posts: 155
Joined: Fri Dec 03, 2010 7:02 am

Re: No More Amazon Affiliation

Postby pacific493 » Mon Jul 04, 2011 10:09 am

pacific493 wrote:
Mister Ed wrote:
StoutFiles wrote:Although I think this is a terrible idea, and I don't support it, I can't help but notice that the way this is worded, it SHOULD mean that no matter WHERE I buy stuff, I shouldn't have to pay sales tax, since my home state has none. To interpret it any other way would mean that they weren't LEVELING the playing field, but tilting it in AGAINST on-line businesses.


Why do you think that this would tilt the playing field against on-line businesses? Internet retailers enjoy some fairly significant advantages over brick & mortar retailers as a result of their virtual nature, such as the burdens associated with operating a brick & mortar establishment. Granted, brick & mortar retailers enjoy advantages over internet retailers, such as convenience. However, I don't see how making both internet retailers and brick & mortar retailers collect and remit sales taxes in the same fashion tilts the playing field against internet retailers.


Many small businesses could not handle the accurate collection and payment of sales tax for all their consumers. Many consumers would find that with sales tax included the savings are less than just heading down to a local store and buying the product.


But doesn't that suggest that those aren't viable businesses? If an internet business can't attract sufficient customers or sales to operate profitably when following the same tax administration rules as its brick and mortar competitors, that just seems to me like the free market at work.
pacific493
 
Posts: 52
Joined: Sun May 23, 2010 11:56 am

Re: No More Amazon Affiliation

Postby StoutFiles » Mon Jul 04, 2011 10:48 am

Viable small businesses shouldn't need Amazon affiliation to survive, but here we are. I'm just saying that the Internet is all but dominated by big business, and any laws making life more difficult for small businesses, albeit barely, is painful.

This really isn't about Amazon, just the way things are headed for all small businesses on the web. If FBTB does find a workaround, it'll only be temporary.
StoutFiles
 
Posts: 155
Joined: Fri Dec 03, 2010 7:02 am

Re: No More Amazon Affiliation

Postby onions » Wed Jul 06, 2011 1:13 pm

Locking thread. New thread here: Amazon Is A Go!
onions
Founder
Founder
 
Posts: 73
Joined: Thu Dec 18, 2008 1:45 pm

Previous

Return to Star Wars

Who is online

Users browsing this forum: Bing [Bot], Exabot [Bot] and 7 guests