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Old 12th May 2008, 12:06 PM   #1
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Default Amazon Vs. The State Of New York (Internet Tax)

For those of you who don't already know, Amazon has sued The State of New York over a proposal regarding internet tax.

If you are an online vendor selling through affiliate programs to New York residents, and you sell more than $10,000 to New York buyers through online affiliate sellers, you now are subject to New York taxes on such sales.
Amazon.com is fighting the law hard, because it makes so many sales through affiliates and will have to collect and remit sales taxes. Amazon.com has sued the State of New York, on the grounds that the law is unconstitutional. So we have not yet seen the end of this issue.
It's disappointing to me to see the State of New York attempting to justify this as "leveling the playing field" and I wish Amazon the best of luck in their fight as they are also helping small businesses by doing so.

Anita sums it up nicely in her two points at the end of her post titled: Sliding Down the Internet Tax Slippery Slope over at Small Business Trends.

Do you purchase on the internet because of price - or is it more than that? Convenience, saving fuel by not having to physically shop around, variety? For me, personally, it's the convenience. I don't want to pay $3.70 per gallon to drive around and do price comparisons or scout out the product I'm after at a variety of physical locations when I can do it all from my living room. I'll even PAY MORE for the product for that convenience.

And I have to agree with Anita in that. . .first New York - then all 50 states. It has the potential to turn into a nightmarish situation.

How about you? Your thoughts on this?

Staci Wood | Small Business Trends Radio | Small Business Trends
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Old 12th May 2008, 03:08 PM   #2
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As an individual consumer and citizen I feel that all Internet sales should be taxed according to the laws of the state where they are being shipped / used / downloaded. Tax avoidance in not a legitimate use of the Internet.

However, I would also expect to see it applied to phone and mail order sales, as well. None should have an advantage over the other.

(Not to be confused with "taxing the Internet" which is an entirely different subject, regarding ISP and network services being taxed, like taxing radio signals.)

As an online seller, I dread to see it come to pass. It will truly be a nightmare to administer, not as much from charging the taxes, a bit of software revision will handle that, but as far as reporting and paying to untold tax jurisdictions.

And the degree that the individual states decide to push, as far as just the base state rate, or individual locality rates, or even to the "sewer district" or "transportation district" level could cause many sellers to become major scofflaws.

I can see an entire new industry that will do nothing but process sales by Zip Code or some other definition and handle the administration of nothing but sales taxes, possibly deducting the proper amount, plus their pound of flesh, from each sale at the time of sale, similar to PayPal and some card processors.

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Old 12th May 2008, 10:10 PM   #3
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Most states have already have a use tax on their books that is generally not enforced.

A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state (not for resale), regardless of where the purchase took place. The use tax is typically assessed at the same rate as the sales tax that would have been owed (if any) had the same goods been purchased in the state of residence. Typical purchases that require payment of use tax include those done while traveling (for things carried or sent home), through mail order, or purchases via telephone or internet.
From the first entry when I did a use tax search, Wikipedia, which said it better than I can.

(Pete: In my state, Nevada, I think the purchaser not the seller is responsible for declaring the tax.)

Last edited by jaairey; 12th May 2008 at 10:16 PM.
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Old 13th May 2008, 09:03 AM   #4
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I am with Amazon on this one. I don't agree with having to collect and keep track of tax for every sell I make in every state. I am perfectly willing to collect tax for items I sell to customers located in my state. Having to collect and report tax to each state would be a nightmare. They will only force people into hiding sales to avoid the effort it takes to keep track of everything.

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