Amazon to Start Charging Sales Tax in Texas

I really like Amazon, but I've never understood how they made money. (Better service + great returns policy + free postage = cheaper prices?)

The answer has to lie in their tax affairs - so these investigations don't surprise me. (Most European countries are also getting stuck into them at the moment.)

For example - the UK operation has now become a delivery only company (employing 2,600 people which apparently only turns over £150 million or so.) but the Luxembourg arm employs just 134 people but they manage 7.5 bn Euros.

Hmmm... It's no wonder our public finances are in such a state...

lokerd said:

Uh, not sure if you know this, but Amazon does NOT pay for the shipping back. Yes, you can print the label for free, but read the fine print. If you use THEIR label, then they are going to deduct $$$ from your return. You have to choose the option to print your own label. So, watch out returning stuff...they are making a little money on the return because you can normally ship it for less on your own.

as far as the Tax business, I am in SHOCK!!!! I buy stuff almost daily on Amazon...at least weekly. In the last 30 days, 10 orders. But, today was the first one from Amazon LLC!!! $6 in taxes just became a bad deal on an item that was only marginally less at Amazon. ARGH!!!! But it was so easy with Amazon. I even pay for the Prime for 2 day shipping. This is so frustrating to find out about!!!!

I was going to cancel the item, but I need it before a trip. I was going to put in the cancellation reason "Sales tax?!?!?!?! What the heck!!!! Sorry...but will need to buy this from somewhere else. Please loose the Sales Tax QUICK!!!! Or, change to Tax Exempt...I am eligible. Thanks!" But I decided I needed the item too bad, and there are very few in the country to even have any at any price.

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You're right about shipping as far as returning items because you just didn't like the item--but Amazon does pay shipping to return defective items.

This could be huge if they are able to pull it off!!!

http://www.cnn.com/2012/07/12/tech/amazon-same-day-delivery/index.html

http://multichannelmerchant.com/crosschannel/amazon-same-day-delivery-0715es1/

Heck, the tax issue aside, I could imagine this might be a bigger blow to retailers!!

bobr1952 said:

You're right about shipping as far as returning items because you just didn't like the item--but Amazon does pay shipping to return defective items.

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I have also had them pay shipping for items I returned that were not defective. It seems that it is at their discretion to pay anyway and ignore the policy.

rhett7660 said:

Heck, the tax issue aside, I could imagine this might be a bigger blow to retailers!!

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Oh, you've got that right! All the politicians and B&M retailers declaring victory and crowing about how this will "level the playing field" are soon going to learn the meaning of the old saying "be careful what you ask for, you just might get it."

This appears to be a deliberate strategic shift by Amazon, who stopped bitterly contesting these tax grabs recently. They will compete by building distribution centers very close to metropolitan areas and then offering next-day delivery standard, and same-day delivery for a small additional fee. Once they've completed configuring their business to achieve this, what possible reason could there be to shop at a B&M retailer?

An excellent and more detailed analysis from Slate is here:

http://www.slate.com/articles/business/small_business/2012/07/amazon_same_day_delivery_how_the_e_commerce_giant_will_destroy_local_retail_.html

Never mind--already said enough on this one.

VideoFreek said:

Oh, you've got that right! All the politicians and B&M retailers declaring victory and crowing about how this will "level the playing field" are soon going to learn the meaning of the old saying "be careful what you ask for, you just might get it."
This appears to be a deliberate strategic shift by Amazon, who stopped bitterly contesting these tax grabs recently. They will compete by building distribution centers very close to metropolitan areas and then offering next-day delivery standard, and same-day delivery for a small additional fee. Once they've completed configuring their business to achieve this, what possible reason could there be to shop at a B&M retailer?

An excellent and more detailed analysis from Slate is here:

http://www.slate.com/articles/business/small_business/2012/07/amazon_same_day_delivery_how_the_e_commerce_giant_will_destroy_local_retail_.html

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Exactly. I am looking forward to this, with shipping and tax it is still cheaper than most B&M stores....

lokerd said:

Uh, not sure if you know this, but Amazon does NOT pay for the shipping back. Yes, you can print the label for free, but read the fine print. If you use THEIR label, then they are going to deduct $$$ from your return. You have to choose the option to print your own label. So, watch out returning stuff...they are making a little money on the return because you can normally ship it for less on your own.

as far as the Tax business, I am in SHOCK!!!! I buy stuff almost daily on Amazon...at least weekly. In the last 30 days, 10 orders. But, today was the first one from Amazon LLC!!! $6 in taxes just became a bad deal on an item that was only marginally less at Amazon. ARGH!!!! But it was so easy with Amazon. I even pay for the Prime for 2 day shipping. This is so frustrating to find out about!!!!

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So it turned a $73 item into a $79 item or something of that sort. Technically you owed the tax anyway. If you look it up, you'll see what I mean. They went after the retailer as it's not cost effective to pursue each consumer. Expect more of this as the older laws preceded a time when everything was ordered online.

VideoFreek said:

Oh, you've got that right! All the politicians and B&M retailers declaring victory and crowing about how this will "level the playing field" are soon going to learn the meaning of the old saying "be careful what you ask for, you just might get it."

This appears to be a deliberate strategic shift by Amazon, who stopped bitterly contesting these tax grabs recently. They will compete by building distribution centers very close to metropolitan areas and then offering next-day delivery standard, and same-day delivery for a small additional fee. Once they've completed configuring their business to achieve this, what possible reason could there be to shop at a B&M retailer?

Click to expand...

While sales tax in general isn't a great way to apply tax to anything (mostly in that it's highly regressive by its nature), it is there, and you don't want B+M retailers to simply become showrooms for Amazon. If you're at the shop and you're going to pay roughly the same either way, what would stop you from purchasing the item?

VideoFreek said:

Oh, you've got that right! All the politicians and B&M retailers declaring victory and crowing about how this will "level the playing field" are soon going to learn the meaning of the old saying "be careful what you ask for, you just might get it."

This appears to be a deliberate strategic shift by Amazon, who stopped bitterly contesting these tax grabs recently. They will compete by building distribution centers very close to metropolitan areas and then offering next-day delivery standard, and same-day delivery for a small additional fee. Once they've completed configuring their business to achieve this, what possible reason could there be to shop at a B&M retailer?

An excellent and more detailed analysis from Slate is here:

http://www.slate.com/articles/business/small_business/2012/07/amazon_same_day_delivery_how_the_e_commerce_giant_will_destroy_local_retail_.html

Click to expand...

As much as I like Amazon (and I have ordered quite a lot from them), no matter how fast they can ship I will still prefer local B&M stores for products that I am not sure about and might want to return. It has been worth the extra cost to me in the past and will continue to be so.

thekev said:

While sales tax in general isn't a great way to apply tax to anything (mostly in that it's highly regressive by its nature), it is there, and you don't want B+M retailers to simply become showrooms for Amazon. If you're at the shop and you're going to pay roughly the same either way, what would stop you from purchasing the item?

Click to expand...

danny_w said:

As much as I like Amazon (and I have ordered quite a lot from them), no matter how fast they can ship I will still prefer local B&M stores for products that I am not sure about and might want to return. It has been worth the extra cost to me in the past and will continue to be so.

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Can't argue with the above points, but in many cases you already know what you want. Do you really need to visit Best Buy to look at a Blu Ray disk? In the past, the retail stores still had the advantage of instant gratification--you could stop off after work and pick it up, or wait 3-5 days for Amazon to ship it to you (or pay a pretty price for quick delivery). It is clear that Amazon is positioning itself to eliminate this disadvantage. That is why they don't care about sales tax anymore--to execute this strategy, they need distribution centers near large cities, not in way-off rural areas.

I just hope B&M stores will offer competitive prices with Amazon, now. Even with sales tax, most electronics I buy are still significantly cheaper than my local Best Buy before tax. For instance, I found a Plantronics bluetooth earpiece I liked at Best Buy for $50. Then I checked on Amazon and it was ~$25. If it was only a couple dollars difference, Best Buy would've gotten my business, but not when I can get the same thing for half off. I even told them I would pay 10% more than the Amazon price at Best Buy and they declined. So, until the B&M stores learn to keep prices somewhat inline with what I can get the same item for online, I won't be shopping there.

WesCole said:

I just hope B&M stores will offer competitive prices with Amazon, now. Even with sales tax, most electronics I buy are still significantly cheaper than my local Best Buy before tax. For instance, I found a Plantronics bluetooth earpiece I liked at Best Buy for $50. Then I checked on Amazon and it was ~$25. If it was only a couple dollars difference, Best Buy would've gotten my business, but not when I can get the same thing for half off. I even told them I would pay 10% more than the Amazon price at Best Buy and they declined. So, until the B&M stores learn to keep prices somewhat inline with what I can get the same item for online, I won't be shopping there.

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Keep in mind (and this isn't necessarily directed at you - but it does open the door to the discussion).

A B&M store is also paying property taxes that supports the schools, water, sewer, police, fire, roads, etc in your neighbourhood (or in a nearby one). On-line retailers don't. Usually they locate their warehouse in locations with minimal property taxes, plus warehouses are taxed at a much lower rate than a retail operation. This property tax is an expense that gets passed on, but it also subsidizes the property taxes that you or your landlord pays. Usually, commercial property taxes are higher than residential.

A B&M store is also paying to maintain a bunch of parking spots, either directly if they own the property, or through their lease. On-line retailers don't.

A B&M often has a budget for supporting local charities or local events (sponsoring a sports team, or donating surplus goods to a school or club). On-line retailers don't.

And of course there are the jobs that a B&M store brings to a community. Those wages circulate through the community, and are somehow benefiting you in lower taxes, lower fees, something somewhere.

A large portion of the "extra" money you pay a B&M store stays in your community. And an on-line retailer doesn't.

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One of the things that never fails to amuse me is listening to someone complain that their community is dying a slow death, with stores closing everywhere.... while buying their stuff on-line.

toxictrix said:

http://www.dailytech.com/Amazon+to+Collect+Online+Sales+Taxes+in+Texas+Starting+July+1+2012/article24571.htm

Looks like they will lose a lot of business especially since they are following it up with California and Arizona. I won't be buying from them much anymore may as well just visit a store if I want to pay tax.

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Except that Amazon is usually still cheaper than going to a local store, even with sales tax. I bet this won't have much of an effect.

It's Finally In California

Argh.. I was going through checkout and noticed that tax had been applied. Usually some merchants do this, but I bought from Amazon directly. It was a little off-putting at first, you're so used to paying the flat price with nothing else added, especially if you're a Prime member. I'll get used to it, I suppose.

http://articles.latimes.com/2012/sep/15/business/la-fi-amazon-sales-tax-20120915

It seems to have started on SATURDAY at 12:01AM.