It's Very Taxing

Plutonius

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An interesting article showing how many retailers using Amazon's e-commerce have avoided paying sales tax over the years and how they owe a combined five billion / year. These businesses are now panicking because of talk on collecting the back taxes / penalties by the end of the year.

Apple was following current tax laws in Ireland when some of you took issue with Apple. Amazon is claiming that the responsibility for collecting the sales tax is with their e-commerce sellers and not with Amazon. Do you consider Amazon to be a tax cheat ?
 
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citizenzen

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Mar 22, 2010
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How hard would it be for amazon to tack on sales tax?

They could base it on the buyers address.

What am I missing here?

Edit: it struck me that the issue could be each state exempts certain products from sales tax, and that keeping track of that might be the problem.
 
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Plutonius

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Feb 22, 2003
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I agree with Amazon that the responsibility lies with the vendors on paying sales taxes and not Amazon. If you make Amazon responsible, they'll up the selling fee as it is an administrative cost to keep track of those records.
Another option would be to increase the e-commerce fee to the vendors.
 

vrDrew

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Jan 31, 2010
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How hard would it be for amazon to tack on sales tax?
We live in the era of Big Data. Where computing power and data storage are both so cheap as to be virtually infinite. I simply refuse to believe that Amazon is incapable of calculating sales tax for each individual state and municipality. (Many cities and towns have their own special sales taxes, like in SE Wisconsin we have one to pay for our baseball stadium.)

Failing that, Amazon could enter into some sort of nationwide compact, where it charged a flat 4-5% sales tax on pretty much everything, and then divied that up among states and cities by sales volume per zip code. That would be a move welcomed by pretty much everyone, including bricks-and-mortar retailers in local jurisdictions, who presently feel they are at a disadvantage to online retailers.

Many states rely on sales tax to balance their budgets, to pay for school teachers and highways, parks and government itself. Amazon, one way or another, benefits from those services - as do Amazon's customers. It's only fair that they pay their share.
 

BeefCake 15

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We live in the era of Big Data. Where computing power and data storage are both so cheap as to be virtually infinite. I simply refuse to believe that Amazon is incapable of calculating sales tax for each individual state and municipality. (Many cities and towns have their own special sales taxes, like in SE Wisconsin we have one to pay for our baseball stadium.)

Failing that, Amazon could enter into some sort of nationwide compact, where it charged a flat 4-5% sales tax on pretty much everything, and then divied that up among states and cities by sales volume per zip code. That would be a move welcomed by pretty much everyone, including bricks-and-mortar retailers in local jurisdictions, who presently feel they are at a disadvantage to online retailers.

Many states rely on sales tax to balance their budgets, to pay for school teachers and highways, parks and government itself. Amazon, one way or another, benefits from those services - as do Amazon's customers. It's only fair that they pay their share.
Well the calculation part is more complicated than it sounds due to laws and regulations that require more administrative diligence if they do take this on.

Amazon is actually getting into the Brick and Mortar business to disprove the fact that sales tax is the reason for their demise against online businesses, which I agree that it is not the reason.
 

Macky-Mac

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May 18, 2004
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Well the calculation part is more complicated than it sounds due to laws and regulations that require more administrative diligence if they do take this on....
according to the article Amazon's already started calculating and collecting these taxes for its own sales, so doing the calculation to add on to the sales of other vendors wouldn't be particularly hard



Would you agree then that Amazon is responsible for at least reporting all these e-commerce sales to the states so that the states can go after the e-commerce sellers if the taxes are not paid ?
seems likely to be something that Amazon will be doing soon anyway.....from the article;
Officials in Massachusetts recently won a court order requiring Amazon to divulge the names of all marketplace owners that have done business on the site since 2012. Other states have filed similar legal challenges.
 
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rjohnstone

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Amazon can collect taxes on behalf of the vendors IF the vendor requests it, but it's the vendors who are responsible for paying the collected taxes to their respective state/local governments, not Amazon.
 
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Herdfan

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Apr 11, 2011
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How hard would it be for amazon to tack on sales tax?

They could base it on the buyers address.

What am I missing here?

Edit: it struck me that the issue could be each state exempts certain products from sales tax, and that keeping track of that might be the problem.
It would be easy if all they worried about was state sales taxes. But some states allow counties and municipalities to get in on the game. So while the sales tax might be 6% for the state, if you are inside the city limits, you pay an extra 1%. For me, I have an address from the nearest city, but I am not in the city limits. So they would really have to have someone keep up with all the tax rates.

As for the exemption, most computer programs will take care of this and I am sure their are companies that keep this data current, but you would have to subscribe to it.

Easiest solution is a simple 5% online tax paid to the state. Everyone would pay the same rate for all online purchases.
 

Rhonindk

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We live in the era of Big Data. Where computing power and data storage are both so cheap as to be virtually infinite. I simply refuse to believe that Amazon is incapable of calculating sales tax for each individual state and municipality. (Many cities and towns have their own special sales taxes, like in SE Wisconsin we have one to pay for our baseball stadium.)

Failing that, Amazon could enter into some sort of nationwide compact, where it charged a flat 4-5% sales tax on pretty much everything, and then divied that up among states and cities by sales volume per zip code. That would be a move welcomed by pretty much everyone, including bricks-and-mortar retailers in local jurisdictions, who presently feel they are at a disadvantage to online retailers.

Many states rely on sales tax to balance their budgets, to pay for school teachers and highways, parks and government itself. Amazon, one way or another, benefits from those services - as do Amazon's customers. It's only fair that they pay their share.
State tax
City tax
Other tax
Item and/or use dependent
What address is used? I can be in NYC, living in LA, buying for someone in Flint.
And you are relying on the cities to report accurate tax rates on time.

Not so simple and I am sure I missed some complications.
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It would be easy if all they worried about was state sales taxes. But some states allow counties and municipalities to get in on the game. So while the sales tax might be 6% for the state, if you are inside the city limits, you pay an extra 1%. For me, I have an address from the nearest city, but I am not in the city limits. So they would really have to have someone keep up with all the tax rates.

As for the exemption, most computer programs will take care of this and I am sure their are companies that keep this data current, but you would have to subscribe to it.

Easiest solution is a simple 5% online tax paid to the state. Everyone would pay the same rate for all online purchases.
How to handle the no-tax locations?
 

citizenzen

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Mar 22, 2010
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It would be easy if all they worried about was state sales taxes. But some states allow counties and municipalities to get in on the game. So while the sales tax might be 6% for the state, if you are inside the city limits, you pay an extra 1%. For me, I have an address from the nearest city, but I am not in the city limits. So they would really have to have someone keep up with all the tax rates.

As for the exemption, most computer programs will take care of this and I am sure their are companies that keep this data current, but you would have to subscribe to it.

Easiest solution is a simple 5% online tax paid to the state. Everyone would pay the same rate for all online purchases.
My county and municipality do the same thing, adding onto a base rate set by the state. I agree that a flat rate, or the base state rate would be something easily achieved.
 

Huntn

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May 5, 2008
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The Misty Mountains
An interesting article showing how many retailers using Amazon's e-commerce have avoided paying sales tax over the years and how they owe a combined five billion / year. These businesses are now panicking because of talk on collecting the back taxes / penalties by the end of the year.

Apple was following current tax laws in Ireland when some of you took issue with Apple. Amazon is claiming that the responsibility for collecting the sales tax is with their e-commerce sellers and not with Amazon. Do you consider Amazon to be a tax cheat ?
I don't know. I do know in the States where Amazon has agreed to pay the state sales tax, like Texas where I reside, the tax is collected by Amazon, at least that is my impression as Amazon facilitates the sale regarding their own merchandise and 3rd party retailers.
 

Plutonius

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Original poster
Feb 22, 2003
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I don't know. I do know in the States where Amazon has agreed to pay the state sales tax, like Texas where I reside, the tax is collected by Amazon, at least that is my impression as Amazon facilitates the sale regarding their own merchandise and 3rd party retailers.
Amazon started collecting taxes on the stuff they sell but not for stuff sold by the e-commerce sellers on their site. Amazon also does not give the sales information on their e-commerce sellers to the states other than the states that took Amazon to court.
 

blackfox

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Feb 18, 2003
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well, I live in Oregon so this is not directly relevant to me...still, interesting issue. Is this a case of laws not keeping pace wit technology?
 

BeefCake 15

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May 15, 2015
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Not very hard at all...

View attachment 726634
It's not a difficult tax to do but there are more activities in the backend that goes on in accounting and legal for tracking, compliance and regulations purposes beyond a formula in the shopping cart. Most companies online don't want to do it as to not deter customers from higher cost for sure but also all companies try to avoid any responsibility that can lead them to pay fines due to mistakes.