No More Amazon Affiliation

[SHL27]

The big box stores claim it's unfair that sales tax isn't collected, but Amazon and other on-line only retailers don't get all the tax cuts, grants, and whatever else that are given to the Wal-Marts and Targets so they can build a new store in the area.

As stated by so many others the States/Cities/Country needs to live within it's means, not pass legislation to bleed every lost drop of money out of its citizens.

[deco_droid]

ok people, let's not get out the pitchforks just yet. amazon (as far as any of us knows) has done nothing wrong. the laws are what they have been for years, yet when a few companies do well (i.e. better than their competitors), some lawmakers tend to step in, meddling where they do not belong.

first, the idea that amazon has gained market share through trickery or "ducking taxes" is asinine. they dominate because of one thing -- selection. they started out with mostly books and cd's of course, but these days you can find and buy most anything that can be shipped. advantage, amazon...

but let's not cry too much for the brick and mortar stores -- they have a supreme advantage over sites like amazon, and that is of course -- location. thousands of nearby stores offer us the same products amazon does, with generally similar prices. if i need a last minute gift or decide i want a particular dvd today, amazon cannot compete in that arena. advantage, brick and mortar...

amazon is a lot like the mail order companies of the old days that had no real "store" to purchase from. i doubt many people ever thought that was an unfair advantage. you can get product x right away at the store in town, or you could maybe choose from products x, y and z in the catalog and wait for delivery. it's been a simple trade off for decades, and i doubt any company could ever merge the two concepts.

and for the record, i buy from amazon and "real" stores, as i would guess, most americans do. much ado about nothing...

[hye]

Since many people here seem to be blaming the government for carelessly spending tax revenue (which they undoubtedly do), I feel I should remind everyone that most states have a Use Tax. Taking California as an example, what this basically means is that if you buy something that you use in California that would normally be subject to sales tax (like LEGO), but the retailer does not collect sales tax, then you owe Use Tax equivalent to the sales tax that would have been assessed for the item(s). It is the law to self-report and pay Use Tax when you complete state income taxes each year.

So legally, a $30 item purchased from Amazon and a $30 item purchased from a brick-and-mortar store should both end up costing the same $30 + tax. However, since most people fail to report Use Tax, Amazon gets an advantage. Whether you believe the burden should be on Amazon to collect sales tax or help states collect use tax is something that can be debated. It's pretty clear to me, though, that Amazon is deriving benefits from people cheating on Use Taxes and the difficulty with enforcing it, to the detriment of state tax revenue and competitive advantage over brick-and-mortar places.

[Mister Ed]

I'm not sure how "no taxation without representation" is at issue here. Amazon isn't being taxed (and that principle applies to individuals, not business, anyway, since businesses can't vote), their customers are. And the people that Amazon would be collecting taxes from DO live in the states in question, and therefore technically DO owe the tax, and DO have representation in that state.

Thankfully, I live in Oregon, and have NO sales tax, so it is a moot point for me (at least personally. I am bummed about the effect it is having on this site.)

The Use Tax thing has always struck me as ludicrous. Unenforceable, and essentially equals charging tariffs on out of state goods, to individuals only. And what if you paid the other state's sales tax? Do you have to be double taxed on the same item, or just pay the difference? And if the latter, does the state give ME a refund if I paid a HIGHER sales tax elsewhere? Or for that matter, does that mean when I travel to CA, if I can show I'm from Oregon I shouldn't be charged sales tax at all? I mean, if it is fair to expect Californians to pay their state sales tax no matter what state they buy stuff in, then it MUST be fair for me to expect to pay MY state's sales tax (0%) when I'm in California, right?

I'm surprised that such a tax is so widespread. I guess people are all too happy to vote for a tax, even one that is as stupid as that, as long as they are convinced THEY won't have to pay it.

[hye]

The Use Tax thing has always struck me as ludicrous.

I agree. There are proponents of a value added tax (VAT) system like they have in the EU, but in the US you'd have to get all the states to agree to it!

[Feralcom]

I'm not sure how "no taxation without representation" is at issue here.

Its collected by the company, from the buyers and then given to the requested state. So while the company isnt taxed directly, they are still paying out the tax. The burden and overhead is on the company and the requesting State basically gets free money because said company makes no use of that States tax spenditure.

Unfortunately, it what we have been raised on. I will guess that the most of us older members are children of the late 60s or early 70s. We have always paid social security, income and sales taxes. Unlike our grandparents (maybe), we don't know a life without them. We don't think anything is wrong with taxes...even when they are used to bail out billionaires.

[Trooper10]

gorram - totally sucks. So effectively CA is trying to tax sales that are occurring outside the state - I would thing that that is actually unconstitutional...me not being a constitutional lawyer or anything.

[Mister Ed]

I'm not sure how "no taxation without representation" is at issue here.

Its collected by the company, from the buyers and then given to the requested state. So while the company isnt taxed directly, they are still paying out the tax.

Still not the same thing as the company being taxed, and, as I said, "No taxation without representation" cannot possibly apply to a company, since companies have NEVER had a vote. That principle applies to individuals. If it applied to companies, companies couldn't be taxed at all, even in the state in which they operate...

[Mister Ed]

The burden and overhead is on the company and the requesting State basically gets free money because said company makes no use of that States tax spenditure.

The people who are actually PAYING the tax DO make use of that State's tax spenditure, even if the company doesn't.

[Feralcom]

The burden and overhead is on the company and the requesting State basically gets free money because said company makes no use of that States tax spenditure.

The people who are actually PAYING the tax DO make use of that State's tax spenditure, even if the company doesn't.

All business comes down to an individual, partners or share holders (voters) and tax departments, accountants, etc. do not work for free.

I also doubt you would expect a California resident to pay taxes on items they bought while physically in Nevada when they return from vacation.

But i think we just see things differently or at least on some level. Im sure this wasn't meant to turn into a political debate and I don't wish to ruin a toy site with it. Ill just end with saying I hate this situation has hurt a site I love.

[banthafodder]

Having a business in CA I can tell you that they do expect you to pay tax on everything you buy online or in another state. Even if I physically went to another state to buy a widget and payed that state tax, if I brought it back into CA and used it in CA I would have to pay CA state tax on top of that. Granted for the individual buying things it may never come to anything but I have been querried by the state tax franchise board and had to show prrof that I payed state tax on items bought outside of the state.

[Mister Ed]

All business comes down to an individual, partners or share holders (voters) and tax departments, accountants, etc. do not work for free.

I also doubt you would expect a California resident to pay taxes on items they bought while physically in Nevada when they return from vacation.

But i think we just see things differently or at least on some level. Im sure this wasn't meant to turn into a political debate and I don't wish to ruin a toy site with it. Ill just end with saying I hate this situation has hurt a site I love.

I'm not trying to make a political point, really, and I'm not sure we disagree all that much. I think this is a stupid idea, too. I'm just saying that 1.) collecting taxes isn't the same as paying them, and 2.) businesses, while employing individuals, have always been taxed separately, and ARE not, and CAN not be treated the same as individuals in terms of the "taxation without representation" principle, since they have no direct representation as a unit, and never have. All I'm saying is that particular principle doesn't apply in this case. That doesn't mean that I'm supporting the idea.

[MrCRskater]

This news is disheartening, and especially upsetting as it will directly affect one of our own and of course will impact the experience we all have on the site. Sorry to hear about this, Ace. Seems like a few folks around here may have some ideas to regain those operating funds, so hopefully we can work something out.

[The Brain]

gorram - totally sucks. So effectively CA is trying to tax sales that are occurring outside the state - I would thing that that is actually unconstitutional...me not being a constitutional lawyer or anything.

No, because such a tax-collecting measure would only affect those consumers ordering something from within California's borders. The CA tax maneuver doesn't (directly) affect anyone living outside the state who doesn't already have to deal with similar laws passed on a state-by-state basis. You're absolutely right that it would be unconstitutional, but that's not exactly what's really going on.

Personally, I think it's a stupid stunt Amazon is pulling that will not benefit anyone in any way shape or form. Granted, they have every right to do this. But as the old saying goes, "Just because you can do something, doesn't mean you should." Yes, I believe that the maneuver by CA to close the deficit that includes the tax-collecting provision is a desperate and foolishly misplaced attempt, but nothing in their legislation caused the affiliate program to close down--that was all retaliatory and the responsibility and blame rests squarely with Amazon. Does the political system in the state barely work? Sure, it's as dysfunctional as anything you can imagine. But frankly, they're not the ones to blame for this; Amazon shouldn't act like a pouting child who's throwing a tantrum.

Ace, I have nothing but sympathy for you, and I hope for your sakes (and the site's!) that these political issues are reversed, and that in the meantime, you don't suffer too drastically from this.

[StoutFiles]

just voicing my thoughs and please keep in mind I'm from Europe and don't know the intricacies of US law:
couldn't you set up a foundation/or LLC in another state that operates FBTB and you as an employee?

Nope. Nor can he get a P.O. Box in another state.

I feel bad it's come to this, but states want thir tax dollars and heavily favor brick/mortar stores that pay taxes and employ people. Small Internet businesses will be trampled before this is all over. Now, at some point a middle man, such as a credit card company will handle tax laws for the buyer/seller exchange...for a fee, of course. Who knows how that much will cost, but it's still a ways away.

For now, I wouldn't hold my breath waiting for this bill to be repealed. Many states have already passed it and it's going to stay, for better or for worse.

This was my first thought too, just set up in an other state. You mention that he cannot do that. But why not? As far as I know he could establish a business presence anywhere! We run a real-estate business in Florida, under an LLC in Nevada. It is really not hard to set up.

Or just find an individual in a different state who would take care of the Amazon Affiliation for FBTB. My first choice would be Nevada, as it is unlikely that such stupid law will be passed there. And there are still many other states who don't have this law, although if they get desparate enough for money they may establish it as well.

The point is that there are definitely options. It may just require some research, consultation and creativity.

You're naive if you think this won't affect every state. Besides, there are other bills that kill small internet businesses on the horizon.

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. " He can't avoid this forever, it's the reality of where eCommerce is going. If he was able to somehow find a workaround it'd just be a stopgap.


http://www.webmasterworld.com/ecommerce/4325213.htm

[Mister Ed]

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.

[ikarus]

The way I read it, "all businesses collect the sales tax in the state where the consumer resides.". Meaning no sales tax would have to be collected from a citizen whose permanent residence is in Nevada (even if he's on holiday in New York).

There are proponents of a value added tax (VAT) system like they have in the EU, but in the US you'd have to get all the states to agree to it!

Oh, VAT is very much the same kind of headache. It's may be easier for customers, but it's one big headache for companies.

[gillzManiju]

I'm not sure its possible but perhaps you could try to find away to locate your business in another state not affected by these crazy tax laws. Also when it comes time for elections vote with your feet.

[King]

Ace-

Sucks to hear this. I live in AZ and we have a Transaction Privilege Tax rather than a sales tax. This just forces businesses to pay the tax whether or not they collected anything from the customer (instead of collecting the tax "for the state" from the customer).

I'm guessing that this may be an issue with the expense of managing the issue for amazon. With so many people in CA and the likelihood of a large number of affiliates, this would likely be a complex issue to manage for Amazon. Maybe they did a simple cost-benefit analysis and the numbers just didn't work out. It seems that they would need to develop a large infrastructure just to collect the money for the state.

That said, as others have mentioned, many states have similar laws about paying taxes on outside purchases if you are a resident. They usually just go after the big purchases like cars rather than the small stuff. With a car it is easy for them to ding you when you register it if they feel that you tried to avoid paying tax on the purchase.

King

[LegoStarWarsLSW]

Dude, that's just not cool.