From The American Booksellers Association:
Recently, Amazon.com petitioned the U.S. Supreme Court to overturn New York State’s sales tax fairness law, [which would require Amazon to collect sales tax on sales to New York residents even though Amazon has no physical presence in New York]
. . . .
I am puzzled.
On the one hand, it’s been widely reported in the media that Amazon has come around to supporting efforts to collect sales taxes equitably. On the other hand, Amazon continues to go to extraordinary lengths to fight every reasonable step forward in establishing a level playing field with regard to sales tax fairness. Which is it?
Even your staunchest competitors acknowledge that Amazon offers a lot of choice. And everyone understands the appeal of selection when it comes to products. But Amazon is offering a confusing set of choices about exactly where it stands regarding fair competition and the best way to ensure an even playing field regarding sales tax collection. I don’t think you can have it both ways.
Amazon has said that all sellers should compete on a level playing field and that states need to be able to collect a tax that is already owed, especially in a time of budget shortfalls.
But you recently asked the U.S. Supreme Court to overturn the decisions of three New York State courts that allow just that.
I don’t get it, Jeff.
But that’s not all. Just a few weeks ago you fired all of Amazon’s affiliates in Missouriso that you wouldn’t have to collect sales tax in that state, a move you’ve taken in multiple other states that have enacted some form of sales tax equity.
So, Jeff, which is it? If you really are in favor of fairness and competition, why not close the gap between your rhetoric and your actions. Collect sales tax in every state that mandates it. Join the ranks of Main Street businesses that are obeying the law and supporting their communities. Yes, you will be giving up that unearned discount advantage you have now, but that’s what it means to compete.
That’s what retailers do.
CEO, American Booksellers Association
Link to the rest at American Booksellers Association
PG and others have discussed this issue before, but here’s a quick recapitulation.
A longstanding Supreme Court decision says states can’t force out-of-state retailers to collect sales taxes on sales to residents of a state if the retailer doesn’t have a physical nexus with the state – an instate store, office, sales representatives, etc.
Amazon is the latest in a long line of mail-order and online retailers to fight states that are trying to get around this Supreme Court decision and force out-of-state retailers to collect sales taxes.
Every state that has a sales tax has a parallel use tax. If a resident of a state for which Amazon doesn’t have to collect sales tax buys something from Amazon, that resident is supposed to file a use tax return and pay the equivalent amount of the uncollected sales tax to the state. Nobody does this and, except for very large purchasers, states don’t try to collect use taxes. They would rather have retailers do the collecting for them.
A bill in congress would essentially overturn this Supreme Court decision. Amazon has supported this bill, probably because it provides some sort of consistency in sales tax rules. PG thinks this is a mistake, but he’s not Amazon. Other online sellers have opposed the bill. Opponents have characterized the bill as as a tax increase on consumers, which it is, and its prospects for passage are uncertain.
If you have a physical presence in a state, like a physical bookstore, you receive all sorts of benefits from state and local government – police and fire service, street cleaning, etc., etc., etc., so when the state requires you to collect sales tax, there’s a sort of balance. Owners and employees of physical retailers are also voters and have access to state representatives who pass tax legislation.
If an online retailer doesn’t have such a presence, it receives no such services. Delivery services like UPS and Fedex have local presences and pay lots of taxes.
There are over 3,000 different sales tax collection regimens in the United States (state, local, school district, etc.) and the amount of sales tax collected on particular items can vary, depending upon the district – fresh fruit is taxed, but canned fruit is not, etc. These districts do not follow zip codes. If you have a physical store, you only have to know the amount of tax to collect for the location of your physical store.
If you’re an online seller, you have the obligation to correctly calculate sales tax for over 3,000 districts. State tax enforcement agencies have the right to audit those who collect sales taxes, so the seller is subject to the possibility of a zillion different audits.
Many online retailers that are much smaller than Amazon have what PG believes to be a well-founded fear of being discriminated against by the taxing authorities of states in which the retailer has no physical presence.
And, by the way, the ABA letter is remarkable clumsy in trying to make any sort of case against Amazon. These people have no idea about what will resonate with the public and what falls flat. Amazon Derangement Syndrome destroys judgment.