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Supreme Court Declines Case On Making Online Retailers Collect Sales Taxes

samzenpus posted about 5 months ago | from the don't-tax-me-bro dept.

The Courts 293

thomst writes "Robert Barnes of the Washington Post reports that the US Supreme Court has declined to hear petitions from Amazon.com and Overstock.com requesting that a decision by the New York State Supreme Court permitting that state's 2008 law requiring sales taxes be collected on Internet sales, even if the seller has no 'business presence' in New York. The New York Court of Appeals ruled that Amazon's relationship with third-party affiliates in the state that receive commissions for sending Web traffic its way satisfied the 'substantial nexus' necessary to force the company to collect taxes, and New York's Supreme Court had affirmed the ruling. The Federal high court's refusal to hear the petitions leaves the state law in effect, even though it appears to conflict with the Court's 1993 decision in Quill v. North Dakota."

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293 comments

Finally a flat playing ground (0, Interesting)

Anonymous Coward | about 5 months ago | (#45577427)

I think this will drive omnichannel commerce and remove the 10% price advantage that companies like Amazon and Overstock enjoyed with respect to Brick and mortar stores. Competition will increase - and it can only be better for consumers.

Re:Finally a flat playing ground (4, Insightful)

viperidaenz (2515578) | about 5 months ago | (#45577475)

Or consumers will just end up paying more, since more tax will be collected.

Shocking news (4, Funny)

fyngyrz (762201) | about 5 months ago | (#45577501)

SCOTUS fails to act against government's financial overreach! We could NEVER have predicted THIS!

Re:Shocking news (1, Interesting)

JMJimmy (2036122) | about 5 months ago | (#45577699)

SCOTUS fails to act against government's financial overreach! We could NEVER have predicted THIS!

Ruling seems pretty reasonable to me. If Amazon ditched it's local 3rd party partners then Quill Corp vs North Dakota would apply to the products Amazon itself sells. As it stands Amazon's 3rd party partners are no different than dealerships are to a car company.

Re:Shocking news (2)

ArbitraryName (3391191) | about 5 months ago | (#45577771)

As it stands Amazon's 3rd party partners are no different than dealerships are to a car company.

That doesn't make any sense. A car dealership buys cars from Ford or whoever and sells them locally. Amazon affiliates own and sell nothing and do nothing more than recommend people shop at Amazon.

Re:Shocking news (1)

JMJimmy (2036122) | about 5 months ago | (#45578141)

As it stands Amazon's 3rd party partners are no different than dealerships are to a car company.

That doesn't make any sense. A car dealership buys cars from Ford or whoever and sells them locally. Amazon affiliates own and sell nothing and do nothing more than recommend people shop at Amazon.

While the nature of the relationship is different each acts, as the court put it, as a nexus for consumers to buy products from the company they have a relationship with.

Re:Shocking news (1)

miroku000 (2791465) | about 5 months ago | (#45577813)

Ruling seems pretty reasonable to me. If Amazon ditched it's local 3rd party partners then Quill Corp vs North Dakota would apply to the products Amazon itself sells. As it stands Amazon's 3rd party partners are no different than dealerships are to a car company.

Is the summary misleading, or are they taking about 3rd party partners and not "affiliates" like the summary said. Amazon Affiliates just put a banner add on their web site. It is more like running an advertisement inside the state than it is like a car dealership.

Re:Shocking news (4, Interesting)

fyngyrz (762201) | about 5 months ago | (#45577843)

Ruling seems pretty reasonable to me. If Amazon ditched it's local 3rd party partners then Quill Corp vs North Dakota would apply to the products Amazon itself sells.

There is no SCOTUS ruling. SCOTUS let a (very bad) state decision stand. Why is it bad? Anything that even *leans* towards someone in state A having to pay taxes to, and which were legislated in, state B, is destructive to the very fabric of the states. Federal taxes are bad enough (for their over-reach and the incredible misuses the money is put to and the inability of the citizen to have actual effective representation in any tax matter) but add my state wanting new highways and taxing your purchase in your state to enable that, or any variation thereto... now you have well and truly screwed the pooch.

Re:Shocking news (1)

Anonymous Coward | about 5 months ago | (#45577989)

Anything that even *leans* towards someone in state A having to pay taxes to, and which were legislated in, state B, is destructive to the very fabric of the states.

If you do business in a state you have to abide by their rules including taxes. This has always been the case. There was a brief time where the SCOTUS decided following these rules as too complicated. Given the massive data mining Amazon does, I highly doubt these taxes are an undue burden. Don't want to pay taxes in a state? Just don't trade or go there.

Re:Shocking news (0)

Impy the Impiuos Imp (442658) | about 5 months ago | (#45578059)

Even assuming for the sake of argument, ludicrously, that every last penny, and then some, at the state and federal level is spent on something Wise and Wonderful and Proper, you still can't just waive away constitutional provisions laying out the relationships between the states and each other, and the feds.

Simple solution (2)

Runaway1956 (1322357) | about 5 months ago | (#45578099)

Amazon should just stop selling in New York to protest the taxes.

What's that? New York has more than 20% of the nation's population? So what? You mean that Amazon might prefer to collect and pay the taxes, rather than lose ~20% of their business? Imagine that . . . .

Re:Shocking news (4, Insightful)

mcmonkey (96054) | about 5 months ago | (#45578185)

Why is it bad? Anything that even *leans* towards someone in state A having to pay taxes to, and which were legislated in, state B, is destructive to the very fabric of the states.

Yeah, but there isn't any of that in this case. The people paying taxes to state B are in state B. The question isn't even does someone/business in state A have to collect taxes for state B. The question is for a business like Amazon, what does it mean to "be" in a state.

This may be a bad decision, but your comment doesn't address why.

Re:Shocking news (2)

Impy the Impiuos Imp (442658) | about 5 months ago | (#45577963)

So if Amazon has no presence, but they are selling on behalf of some company in New York, to somebody in New York, and it ships from that company in New York, not from an Amazon warehouse outside New York, that seems fine.

But do they have to collect tax from a 3rd party company that is, itself, also outsode New York, just because some completely separate partner is in New York?

That would be wrong.

Re:Finally a flat playing ground (2)

alen (225700) | about 5 months ago | (#45577627)

so?

most of these people have no problem voting in local leaders who like to spend $$$

Re:Finally a flat playing ground (1)

mrchaotica (681592) | about 5 months ago | (#45578119)

In theory, it would cause the local government to either lower the tax rate or provide additional services, each of which would equalize the (average) value to the <strike>consumers<strike></strike>taxpayers</strike>citizens.

Re:Finally a flat playing ground (5, Interesting)

nitehawk214 (222219) | about 5 months ago | (#45577477)

Except that big players like Amazon actually want online sales tax. The infrastructure to collect state and local taxes for all 50 states is beyond small retailers, thus either driving them out of business or forcing small retailers to sign up as an Amazon affiliate so they can have someone else deal with the minefield of state and local laws.

Re:Finally a flat playing ground (1)

Anonymous Coward | about 5 months ago | (#45577545)

No, actually, Amazon has been fighting tooth and nail against sales tax for years. Small retailers already can't really compete with Amazon to begin with--they don't need to add more hurdles. Amazon is more interested in competing with brick-and-mortar (Wal-Mart) than online boutiques.

Re:Finally a flat playing ground (1)

0123456 (636235) | about 5 months ago | (#45577637)

Not true. I buy plenty of stuff from small retailers, and not because they're cheaper than Amazon.

There's a place for a 'sells anything to anyone' store like Amazon, but there's also a place for niche stores that specialize in one kind of product and serve it well.

Re:Finally a flat playing ground (2)

alen (225700) | about 5 months ago | (#45577607)

most of the small businesses who sell online use one of the many off the shelf or cloud solutions out there. or they use amazon's website to sell their wares. most of the older crap amazon lists is really sold by someone else.

any small business trying to write their own code for this is plain dumb

Re:Finally a flat playing ground (0)

Anonymous Coward | about 5 months ago | (#45577951)

any small business trying to write their own code for this is plain dumb

I don't want to use companies like Amazon. I don't want "cloud solutions" because then they'll be able to get some of my information. If I wanted any of this garbage, I'd use it. But I don't.

Re:Finally a flat playing ground (1)

FacePlant (19134) | about 5 months ago | (#45577655)

You have no idea how badly amazon doesn't wan't this burden, or the one passed a couple of years ago that forces them to send 1099s to anybody how they pay more than $600 in a year. No business wants to pay to implement these processes. Especially since they are not revenue stream, they are very real cost drivers.

Annoying systems, with no business value, with lots of human intervention, and compliance costs. It's a bit like the cost of implementing Sabannes-Oxley, but on a smaller scale.

Re:Finally a flat playing ground (1)

AK Marc (707885) | about 5 months ago | (#45578187)

Not just that it's a cost, but it's a cost for Amazon, that doesn't apply to Newegg, or Alibaba, or others. It's a competitive disadvantage for Amazon. Tall Poppy syndrome.

Re:Finally a flat playing ground (1)

cayenne8 (626475) | about 5 months ago | (#45577787)

Except that big players like Amazon actually want online sales tax. The infrastructure to collect state and local taxes for all 50 states is beyond small retailers, thus either driving them out of business or forcing small retailers to sign up as an Amazon affiliate so they can have someone else deal with the minefield of state and local laws.

While your point is valid, I don't think that will be what helps Amazon.

I'm guessing myself, like many people put up with the 2x day delay in getting something (delayed gratification) due to not having to pay sales tax on orders from Amazon.

I save my large $$ purchase for online, if I buy something about $2K, I'd rather wait a few days for shipping and not have to pay 9% of that in taxes.

If I had to pay sales tax, I'd just as soon buy it locally for immediate gain, and all things being local (if all was taxed) I'd just as soon keep things local.

Re:Finally a flat playing ground (2)

ArbitraryName (3391191) | about 5 months ago | (#45578209)

I'm guessing myself, like many people put up with the 2x day delay in getting something (delayed gratification) due to not having to pay sales tax on orders from Amazon.

How much do you buy that you need "immediate gratification" for? Most of the things I buy are because I have to. Clothes, household items, etc.I shop online primarily for the convenience, with selection and cost coming next. The fewer retail stores I have to spend my time in, the better. Clicking "buy" on a website is something I can easily do with time that would otherwise be wasted. Going to a retail store is a significant chunk of my very limited free time.

If I had to pay sales tax, I'd just as soon buy it locally for immediate gain, and all things being local (if all was taxed) I'd just as soon keep things local.

Shopping at a retail store like Target, Sears, or Home Depot isn't really "keeping it local".

Re:Finally a flat playing ground (1)

nitehawk214 (222219) | about 5 months ago | (#45578245)

If I had to pay sales tax, I'd just as soon buy it locally for immediate gain, and all things being local (if all was taxed) I'd just as soon keep things local.

I would think that majority of Amazon's sales are not to people merely seeking to avoid sales tax. I don't know what amount of their sales go on big ticket items where this would be prevalent though.

Re:Finally a flat playing ground (1)

Pherdnut (969927) | about 5 months ago | (#45577917)

I know you're wrong. If only it wasn't so hard to find a link somewhere pointing to an article about Amazon fighting to get the supreme court to take their fight against sales taxes online...

Re:Finally a flat playing ground (1)

DogDude (805747) | about 5 months ago | (#45578123)

The infrastructure to collect state and local taxes for all 50 states is beyond small retailers

I agree! How would online retailers keep track of long lists of numbers and do arithmetic? It would take some kind of mechanical "computer" of some sort that could handle a complex procedure like that. That is quite a burden to be placed on online retailers, indeed.

Re:Finally a flat playing ground (1)

Anonymous Coward | about 5 months ago | (#45578229)

Depends on how small "small business" is. Many accounting apps can deal with sales tax jurisdictions already. And if not provided by the app, companies that have addons to do it and/or provide periodic updates.

So this is "hard" for companies that don't have to remit sales tax (oregon, new hampshire), or have tried to roll their own, and now have to add in byzantine Midwest tax jurisdictions and special cases by products or services.

Re:Finally a flat playing ground (4, Interesting)

MightyYar (622222) | about 5 months ago | (#45577527)

I don't think it will help them much. Brick and mortar still has to pay property tax, utilities, etc. They still have to finance high-value real estate. They still have to have a clean, wide-open space which is aesthetically pleasing but economically wasteful. Anyway, I'm not aware of states with 10% sales tax - usually it is about half of that, and the highest seems to be 7.5% in CA. To get to 10%, I have to scroll down the list and find the highest state taxes and combine them with the highest local taxes.

Re:Finally a flat playing ground (2)

bev_tech_rob (313485) | about 5 months ago | (#45577605)

I don't think it will help them much. Brick and mortar still has to pay property tax, utilities, etc. They still have to finance high-value real estate. They still have to have a clean, wide-open space which is aesthetically pleasing but economically wasteful. Anyway, I'm not aware of states with 10% sales tax - usually it is about half of that, and the highest seems to be 7.5% in CA. To get to 10%, I have to scroll down the list and find the highest state taxes and combine them with the highest local taxes.

Fort Smith, AR is close.....9.375 % city & state combined.....

Re:Finally a flat playing ground (0)

Anonymous Coward | about 5 months ago | (#45577693)

9.25% here outside knoxville.

7% state.

I pay the 7% at newegg too since they have a location in TN.
Still worth it.

Random crap internet company? Not so much tho.

Re:Finally a flat playing ground (1)

bob_super (3391281) | about 5 months ago | (#45577723)

Cook County, IL (Chicago) has had up to 11% depending on what you buy.
Lambasted at the time as the highest in the nation by people trying to repel it. I think the extra percent or two has been phased out.

By law, EU countries have to have 15% to 25% VAT for non-essential goods. But it's always included in the price so you're not reminded of it every time you pull out your wallet.

Re:Finally a flat playing ground (1)

MightyYar (622222) | about 5 months ago | (#45577997)

By law, EU countries have to have 15% to 25% VAT for non-essential goods.

I never understood why Europeans went shopping in New York until I heard about their VAT.

Re:Finally a flat playing ground (1)

bob_super (3391281) | about 5 months ago | (#45578037)

The Euro is also creeping up around 1.35 USD, which offsets the current price gouging by the airlines and hotels.

Re:Finally a flat playing ground (1)

CanHasDIY (1672858) | about 5 months ago | (#45578009)

By law, EU countries have to have 15% to 25% VAT for non-essential goods. But it's always included in the price so you're not reminded of it every time you pull out your wallet.

That's funny - when I go look at buying Arduinos straight from the maker's website, all the prices say "+VAT."

Do they just not remind you of it when you're in Europe?

Re:Finally a flat playing ground (1)

cayenne8 (626475) | about 5 months ago | (#45577825)

I don't think it will help them much. Brick and mortar still has to pay property tax, utilities, etc. They still have to finance high-value real estate. They still have to have a clean, wide-open space which is aesthetically pleasing but economically wasteful. Anyway, I'm not aware of states with 10% sales tax - usually it is about half of that, and the highest seems to be 7.5% in CA. To get to 10%, I have to scroll down the list and find the highest state taxes and combine them with the highest local taxes.

In the New Orlean area, with city, state, etc...tax is 9.x%....

Too high for my liking, hence I order everything I can online.

Re:Finally a flat playing ground (1)

ganjadude (952775) | about 5 months ago | (#45577887)

in NY its between 8 and 9.5% depending on locallity

Re:Finally a flat playing ground (1)

MightyYar (622222) | about 5 months ago | (#45578151)

Yes, but clothes and shoes aren't taxed at all until you hit $110, and you can always take the bus over to Paramus and pay no sales tax at all on clothes. Presumably, these same rules will Apply to online retailers. So in effect, nothing will change for those kinds of items.

If you aren't in the market for clothes, I should mention the New Jersey "Urban Enterprise Zones". Those only have 3.5% tax and are easy to get to from NYC.

Re:Finally a flat playing ground (2)

McPierce (259936) | about 5 months ago | (#45577533)

Or, as with here in NC, Amazon will stop the associate/affiliate program in states that enact tax laws.

Re:Finally a flat playing ground (0)

Anonymous Coward | about 5 months ago | (#45577615)

This.

They did the same thing in Colorado.

Re:Finally a flat playing ground (1)

jedidiah (1196) | about 5 months ago | (#45577721)

Best Buy still sucks and so does Barnes and Noble.

Extracting an extra 10% from Amazon customers won't really change that. Even if Amazon were MORE expensive, they still have the benefit of a much wider selection and better availability of stock.

I can't buy what Best Buy doesn't even carry.

So all of this whining about unfairness from the dinosaurs is really stupid.

Re:Finally a flat playing ground (5, Interesting)

Petron (1771156) | about 5 months ago | (#45577751)

I think this will drive omnichannel commerce and remove the 10% price advantage that companies like Amazon and Overstock enjoyed with respect to Brick and mortar stores. Competition will increase - and it can only be better for consumers.

Bull. Flat out bull.

People don't pick Amazon or Overstock to save on sales tax... they do it because the prices are cheaper. When I head to BestBuy and find a SATA cable listed for 25 bucks, and Amazon has it for 4.50... I don't pick Amazon because I "save" 7.25% in sales tax.

Plus those Brick & Mortar stores don't charge shipping... Shipping is almost always higher than sales tax. Now I know you are going to say "But Amazon offers free shipping for orders of $35 or more!"... So does UPS ship for free on those orders? No. Amazon eats the cost to encourage people to buy more. So why doesn't the Brick & Mortar stores offer "We pay the sales tax for all orders over $X!"??? They can reduce the price by what ever the local tax rate is (7.25%) easily enough. They don't because they know that isn't the reason why people are shopping online.

There is a good reason why the SCOTUS refused to hear this: It would be struck down. Article 1, section 9 of the US Constitution states: "No Tax or Duty shall be laid on Articles exported from any State." To put it simply: If I own a store in New Mexico, and I sell to somebody who lives in a different state... I don't collect any taxes or duties on that item. If I have a store in that state, I will have to collect taxes.

Sears & Roebuck had the same sales model as Amazon back in the late 1800's. They didn't collect sales tax either.
Sears sold things by a mail-order catalog.
Customers would read the mail-order catalog, and use a mail-in order form for items, with payment.
After receiving the order and payment, Sears would deliver the requested item.
Amazon does the same thing, just replace "Mail-order/mail-in" with "Online". Changing the way one reads a catalog, or orders items doesn't affect the law. If somebody uses a telephone, it didn't change it, neither should a computer.

Stores in town lost customers due to this, not because of "They don't collect sales tax" but because they offered so much more, at a cheaper price. The brick & mortars did have a "You get it now" features instead of having to wait 2 weeks... but for many, the savings was well worth the wait.

Re:Finally a flat playing ground (2, Informative)

cayenne8 (626475) | about 5 months ago | (#45577871)

People don't pick Amazon or Overstock to save on sales tax... they do it because the prices are cheaper.

Well, that statement does NOT make sense.

Total prices = Cost of Item + Shipping + Sales Tax

So, yes, not paying sales tax quite often makes the large decision in where to purchase, when total sales tax buying locally is close to 10%, that is a significant cost.

I find that the actual prices at Amazon vs most B&M places local are pretty close, but the lack of sales tax and free shipping make the choice pretty easy for me.

Re:Finally a flat playing ground (4, Informative)

Petron (1771156) | about 5 months ago | (#45577979)

It makes perfect sense. Prices are cheaper, and it's not due to that evil sales tax being forced on B&M stores.

Lets look at the SATA cable example.
Best Buy: Cost of Item: $25. Shipping: Free. Sales Tax (7.25%): 1.81 = Total: $26.81.
Amazon: Cost of item: $4. Shipping fee: $4.50 (yes more than 100% of the item's cost), Sales Tax (None) = Total: $8.50.

Which one gets the sale?

Now lets say sales tax is collected (If I live in a state with an Amazon hub): $4 + 4.50 + (0.29) = $8.79. Heck even if the shipping is taxed it's cheaper (+0.62).

Re:Finally a flat playing ground (1)

bws111 (1216812) | about 5 months ago | (#45578147)

That is a dumb example though. The only reason anyone would buy a SATA cable at BB is because they need one right now, and you pay a premium for the ability to get it right now. If you compare the price of things that people actually go to BB for (TVs, cameras, computers, etc) you find they are very close to Amazon's prices, except for that 8% (where I am) sales tax.

Re:Finally a flat playing ground (1)

Petron (1771156) | about 5 months ago | (#45578205)

I didn't "get it right now"... And Best Buy (and other B&M stores) are claiming it's "Sales Tax" why people aren't buying their stuff.

On another note: Last time I was in a KMart, I found some CD Jewel cases for $5.99 (+ tax). Amazon's price was $9.99 (+ shipping). KMart sold some CD cases that day.

Re:Finally a flat playing ground (4, Interesting)

Petron (1771156) | about 5 months ago | (#45578173)

For a second example:
Monsters University Blu-Ray + DVD Combo pack (not Collector's Edition)

Local Tax rate: 7.25%
Place: Item Price + Shipping + Tax = Total

WalMart: 29.96 + 0 + $2.17 = $32.13
Amazon: 23.29 + $3.98 + 0 = $27.27

Amazon's total price is still cheaper than WalMart's list price. Even if there was a sales tax, Amazon would still be cheaper. And if I buy a bit more, the shipping cost will be paid by Amazon.

And the "With big items, it makes a difference"... No, it doesn't. Big items are normally... Big and or heavy. Lets say a TV. The shipping cost of that isn't cheap... Very likely it's higher than what any sales tax that would apply. And either the customer pays it (still being cheaper than the B&M store), or the store eats the cost...

Re:Finally a flat playing ground (1)

EboMike (236714) | about 5 months ago | (#45578095)

Bull. Flat out bull.

People don't pick Amazon or Overstock to save on sales tax... they do it because the prices are cheaper.

Not always true. Stores like Fry's match online prices. People pick Amazon because it's more convenient, there's a wider choice of products, or because they don't (didn't) have to pay sales tax.

You picked out cables as an example. Best Buy is notorious for selling absurdly overpriced "premium" cables with gold-plated connectors or some other stupid gimmick that only idiots would spend money on. But if you pick identical products, there's not that much of a price difference.

Re:Finally a flat playing ground (0)

Anonymous Coward | about 5 months ago | (#45577981)

Right, since Wal-Mart revenues are nearly $500 billion per year. Amazon revenues are about 10% of that. I see your idea of competition doesn't mean what you think it means.

In other words, the sales tax is not really an issue for either retailers or consumers. People are still shopping local, and I don't see Amazon or any other company competing in many areas. It's an issue for the money grubbing evil politicians who wish to increase their power at our expense, while putting us into massive debt.

And don't even bring up Borders or other failed companies. They failed because they sucked, not because they couldn't compete on price.

Re:Finally a flat playing ground (1)

TWiTfan (2887093) | about 5 months ago | (#45577999)

The problem is that this makes it a huge pain in the ass for smaller online retailers. Brick and mortar retailers only have to deal with the taxes on the particular state and local region in which their store is physically located. Any online retailer potentially has to deal with the taxes in every state and region in the world (anywhere a customer could order from).

This means that only the larger online retailers will have the infrastructure to stay in business. If I'm starting a mom-and-pop online service, I'm either going to have to pay a 3rd-party to deal with all the states' and cities' tax laws or go out of business. Because there is no way some little operation is going to be able to handle collecting all the taxes from Nowhereville, Iowa (including know what they are and where to remit them).

Re:Finally a flat playing ground (1)

DogDude (805747) | about 5 months ago | (#45578165)

I'm either going to have to pay a 3rd-party to deal with all the states' and cities' tax laws or go out of business.

So what? Do small online retailers provide some kind of public good that we should waive basic tax collection responsibilities for them? If somebody wants to do business across the entire country, there's a cost to that. It's still about a jillion times cheaper than opening physical stores all across the country.

All your tax avoidance schemes are done (1)

WillAffleckUW (858324) | about 5 months ago | (#45577467)

Just a note, the UK is also going after tax avoiding, not just Italy, and the same goes for the US.

If you sold something, you pay taxes.

Nuff said.

Re:All your tax avoidance schemes are done (-1)

Anonymous Coward | about 5 months ago | (#45577541)

Just a note, the UK is also going after tax avoiding, not just Italy, and the same goes for the US.

If you sold something, you pay taxes.

Nuff said.

Your claim is not 100% true.

The states of Oregon and New Hampshire in the United States do not collect sales tax.

NOW it's "nuff said", bitch.

Re:All your tax avoidance schemes are done (1)

Anonymous Coward | about 5 months ago | (#45577629)

Just a note, the UK is also going after tax avoiding, not just Italy, and the same goes for the US.

If you sold something, you pay taxes.

Nuff said.

Your claim is not 100% true.

The states of Oregon and New Hampshire in the United States do not collect sales tax.

NOW it's "nuff said", bitch.

He didn't specify sales taxes, and his point was about tax avoidance, bitch

Re:All your tax avoidance schemes are done (1)

Jane Q. Public (1010737) | about 5 months ago | (#45578071)

There is a lot more going on here than "tax avoidance", bitch.

The main issue is that States have difficulty collecting their "use" taxes on out-of-state purchases (see my longer explanation above). In fact many people are not even aware that "use taxes" exist. That's not tax avoidance, it's simply tax ignorance.

But the main point is that States simply don't have any legal basis for taxing transactions that happen in another State. Period. That is a violation of our separation of powers.

In order to get around this, many States have been advocating an unconstitutional "internet sales tax", but they don't seem to realize what they'd be giving up in the process.

So there's a lot going on here other than mere "tax avoidance".

Re:All your tax avoidance schemes are done (1)

WillAffleckUW (858324) | about 5 months ago | (#45577635)

Wrong. They have to collect sales taxes that apply. Washington State has a sales tax.

To clarify to the non-Northwesters: (2)

themushroom (197365) | about 5 months ago | (#45577841)

Washington has sales tax paid at purchase. (Local to me it's 9.2%)
Oregon has a state income tax -- so save those receipts.

Thus both states tax their goods, just one more delayed than others, with the benefit that Washingtoninans love shopping in Oregon since they don't pay sales tax and Oregonians (like Alaskans) say "no tax" when purchasing stuff in Oregon.

Re:All your tax avoidance schemes are done (1)

Jane Q. Public (1010737) | about 5 months ago | (#45578137)

"Wrong. They have to collect sales taxes that apply. Washington State has a sales tax."

The key phrase is "that apply." See my longer explanation above. No State has legal authority to tax a purchase in another state. So if a Washingtonian buys a book from a company in Maine (whether they do it in person or via mail order), Washington sales taxes do not apply.

There IS a tax on the item, though. The Washington resident is legally required to pay a "use tax" on the item, which (not so coincidentally) is the same amount as state sales tax. BUT it's a tax on the USE of the item, within the state. Not a tax on the transaction that happened in another state. That's why it's a legal tax.

However, states have trouble collecting use taxes, because they have to rely on people reporting what they bought, and paying taxes on it. That's why they've been trying to push an (illegal) "internet sales tax". The problem is that an internet sales tax violates our separation of powers. It would give states the power to tax transactions in other states... which is a brand-new taxation power prohibited by the Constitution. As it should be.

Re:All your tax avoidance schemes are done (0)

Okian Warrior (537106) | about 5 months ago | (#45577857)

Your claim is not 100% true.

The states of Oregon and New Hampshire in the United States do not collect sales tax.

NOW it's "nuff said", bitch.

And to further drive the point, New Hampshire manages to keep the streetlights on and the fire departments funded, while California (and a number of other governments [governing.com]) are going down in flames.

This despite California having one of the highest tax rates in the US ($3,266 per person per year, ranked 11th) compared to NH ($1,760 per person per year, ranked 42nd). (source [governing.com])*

Before we debate whether the court's decision seems equitable or "reasonable" for the purpose, let's stop and consider whether the basic premise - that the state needs the money - is valid.

Consider a hypothetical situation where the state was completely funded by some other means. I don't know what that would be, but let's suppose the state has investments that return a profit or something. If the state didn't want to expand, didn't need to increase services, and didn't need more money... in that situation, does this tax seem equitable or reasonable? What function does it have, and is the benefit of that function worth the cost of compliance?

We have a clear-cut case of a state that is fiscally prudent and well-managed without excessive taxation.

Before we allow the states to apply the brakes to internet commerce, shouldn't we first consider what the state will do with the money?

(*) NH taxes are about 50% of California, but spends proportionally much more than 50% per person [kff.org]. California is simply inefficient at making use of taxes.

only because (-1)

Anonymous Coward | about 5 months ago | (#45577599)

you enjoy getting fucked in your pooper without questioning the reason taxes are there in the first place

guess what! taxes were not collected before 1913 in the way they are now - the IRS did not exist.

but thanks to bankers who you seem to love, cherish, and obey their every decree, they exist today

Nuff said

Re:only because (0)

Anonymous Coward | about 5 months ago | (#45577689)

guess what! taxes were not collected before 1913 in the way they are now - the IRS did not exist.

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
        —Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789

Source: Death and Taxes [wikipedia.org]

Quite psychic of that Benjamin Franklin, predicting 125 years in advance of 1913 that tax collection would be such a big problem.

Re:only because (0)

Anonymous Coward | about 5 months ago | (#45578217)

American Revolutionary War was started over taxes.

Re:All your tax avoidance schemes are done (0)

Anonymous Coward | about 5 months ago | (#45577677)

If you sold something, you pay taxes.

Actually, sales tax is a tax on the buyer, the seller just collects it. By (mostly unenforced) law, it is the duty of the buyer to pay the "sales and use tax" on stuff they buy if the seller doesn't collect. Legislators (aka "tax farmers") know the chances of actually collecting it are much higher if they make the seller do it. (About the only time it's enforced on the buyer is in e.g. private vehicle sales, collected when you register the car.)

Value-added taxes (VAT), though, are the responsibility of the seller.

Re:All your tax avoidance schemes are done (2)

WillAffleckUW (858324) | about 5 months ago | (#45577745)

Actually, no, VAT is collected at multiple points, by the producer/importer, the wholesaler, and the retailer. To avoid VAT avoidance.

At least in most countries.

Re:All your tax avoidance schemes are done (1)

cayenne8 (626475) | about 5 months ago | (#45577959)

Actually, no, VAT is collected at multiple points, by the producer/importer, the wholesaler, and the retailer. To avoid VAT avoidance.

We're talking about the US here, no such thing as a VAT.

Here each state can have its own taxes on different things...and within each state, often the city has tax laws too. They aren't uniform in one state much less the different states, so this is the problem for having an out of state entity try to figure out and collect sales tax for the multitude of tax laws across the US, it isn't really fair to put that burden on a company and would hinder them selling across state lines.

We're quite happy (so far) not to have a national sales tax, here you are a resident of your state first, THEN a resident of the US second.

Although, if they were to constitutionally ban/repeal federal income tax in trade for a federal VAT that might fly...but that wouldn't address the numerous state tax laws and needs so, it would be added onto what I'd described above.

We're set up here (originally) for most decisions and power to reside with the states, and even with the Federal govt growing in power, they still wield a good bit of independent power. The Feds for the most part on most things cannot order the States to do things directly.

Re:All your tax avoidance schemes are done (5, Informative)

Jane Q. Public (1010737) | about 5 months ago | (#45577769)

"Just a note, the UK is also going after tax avoiding, not just Italy, and the same goes for the US. ... Nuff said."

No, NOT "nuff said". This is NOT ABOUT "avoiding taxes". It is about the sovereignty of states and their freedom from interference by other states. The U.S. is not the UK. Our government is organized very differently.

We have 50 independent States which have independent tax authority, and Point 1 here is that no State has authority to tax transactions that occur in another State. That would violate the latter State's sovereignty. Point 2 is that the Federal government has no authority to collect taxes on behalf of any State. We have 200 years of case law and prior legal decisions to back this up. (Which, I should add, the current Supreme Court seems to take pride in ignoring.)

In fact this was a hotly debated issue -- in court -- about 150 years ago, when mail-order businesses became popular. A person could send a check to somebody in another State, and that company would send the product to the buyer. When this happens, there is Point 3: the transaction is deemed to take place at the location of the business. That is the only workable way to do it: the transaction doesn't take place at the purchaser's location, because companies would have to keep track of tens of thousands of individual taxing districts throughout the country, and put up with tens of thousands of different sets of regulations concerning how to collect and distribute the taxes. That won't work. Even today, when computers could tell you what the taxes are, keeping track of how much tax to collect, and all the different reporting and payment requirements, would only be possible for giant corporations. Small companies would be out of business.

Point 4 is that Internet sales are mail order. The single difference is method of payment. Most people today buy via credit card rather than sending a check.

Point 5: The courts ruled that if the business has a "significant business nexus" within the purchaser's State (usually meaning a "physical presence" link a branch store or warehouse), the transaction can be deemed to take place in the purchaser's own state and is therefore subject to the sales taxes of that state. This is not unreasonable.

Point 5: To get around the "foreign transaction" problem, States came up with the idea of a "use tax". Since they have no authority to tax a transaction that takes place in another state, what they do is tax the purchaser for the use of the item they purchased elsewhere. The use tax is invariably the same amount as a sales tax would be, BUT it isn't a tax on the transaction, it is a tax on the use of the item within the resident's state. So it is legal.

Point 6: States must rely on people reporting their purchases in order to enforce the "use taxes", which many people do not do. In fact many people do not even know use taxes exist unless they purchase an automobile outside their state, in which case states pretty much know where you got it (because of licensing requirements) and will charge the use tax. However, that leads to

Point 7: Although States find it difficult to enforce use taxes on internet (mail order) purchases, difficulty of enforcing the law still does not change the fact that they have no authority to violate State sovereignty by taxing foreign transactions.

So that is a bit of history about how this actually works. The conclusion is Point 8: there is no lack of taxing power on internet (mail order) sales. It's just that the States find it difficult to enforce their use taxes. That is why they have been pushing for an (unconstitutional) "internet sales tax".

The very concept of an across-the-board "internet sales tax" is in fact a violation of our separation of powers. There is no legal basis for States to tax transactions that occur in other States. If they could do that, they could tax anything, anywhere. Texas could tax a transaction between an Ohio resident that occurs in Maryland. If that sounds ridiculous to you, that's because it is. There is simply no legal basis for any of this.

Re:All your tax avoidance schemes are done (1)

Jane Q. Public (1010737) | about 5 months ago | (#45577837)

Corrections:

My point numbering got scrambled at 5. There are actually 9 points, not 8.

"link" should be "like".

Re:All your tax avoidance schemes are done (0)

Anonymous Coward | about 5 months ago | (#45578197)

Out of curiosity, from Point 1, how are states then allowed to tax vehicles purchased out of state (e.g. purchased in Ohio, new owner lives in New York)?

Re:All your tax avoidance schemes are done (1)

DogDude (805747) | about 5 months ago | (#45578201)

That won't work. Even today, when computers could tell you what the taxes are, keeping track of how much tax to collect, and all the different reporting and payment requirements, would only be possible for giant corporations. Small companies would be out of business.

Yeah, that would be hard. It would require some sort of "automation" using some sort of "adding machine". Jeez, I wonder where online retailers would get such a device...

Re:All your tax avoidance schemes are done (0)

Anonymous Coward | about 5 months ago | (#45577817)

If you sold something, you pay taxes.

Nuff said.

Not quite, at least not in the US. The taxes at issue are owed by the consumer. It is consumers, not retailers, that are avoiding taxes.

It would be more convenient (and worthwhile to enforce) if large retailers were compelled to tally up what they owe to various states, rather than states having to rely on their constituents to do the leg work.

Every state that I have lived in includes a line on tax forms in which you are supposed to report un-paid tax for purchase from out of state, etc. I have reported and paid (albeit in ballpark numbers) every year since I started buying things online in the late 90s. Other forms of mail-order purchases are also covered by these "use tax" laws. I am the only person that I know who pays these taxes, but the laws are there and anyone who doesn't is breaking the law.

Amazon etc. may facilitate the avoidance of these laws, but it is really a matter between the collectors and constituents.

Re:All your tax avoidance schemes are done (0)

Anonymous Coward | about 5 months ago | (#45578045)

I am the only person that I know who pays these taxes, but the laws are there and anyone who doesn't is breaking the law.

As well they should. Use tax is the USA's own version of a stamp act or other similar unfair laws. I would even go so far as to say that violating it is an act of patriotism... like posting anonymous tracts, just like during the Revolution. Posting AC for that very reason. No desire to be audited.

Re:All your tax avoidance schemes are done (0)

Anonymous Coward | about 5 months ago | (#45577983)

It's not being avoided if there is no obligation to begin with.

Should you have to pay a fee or tax to McDonalds because you drove by burger king a couple of blocks away? You were trying to avoid McDonalds right? No. The laws of one state do not extend into other states. This has been long established.

Why is it called a sales tax anyways? The person that buys it is the one paying for it, so it should be called a purchase tax.

And what exactly would make New York entitled to ANYTHING? Their firedepartments are not used, nor their police, or any other service. The only services used, are aldready paid for by the resident receiving the goods, and the delivery people. New York is not entitled. they are just trying to extort more money.

Mistake (4, Informative)

Anonymous Coward | about 5 months ago | (#45577485)

There seems to be a mistake with which court ruled and which court affirmed.
The New York Court of Appeals is their highest court; the New York Supreme Court is its "appeals court." Hence, the NY district court ruled, NYSC then affirmed, whereby the high court (NY Court of Appeals) then affirmed once again. Counter-intuitive, I know; but that's the way it is.

Re:Mistake (1)

Anonymous Coward | about 5 months ago | (#45577709)

Close. The New York Supreme Court is the district-level court. The New York Supreme Court, Appellate Division is the first level appeals court. The NY Court of Appeals is the highest court. http://en.wikipedia.org/wiki/Judiciary_of_New_York

the affiliates are a sales force (3, Interesting)

alen (225700) | about 5 months ago | (#45577497)

that's what the NY court ruled, the quill test is satisfied and there is no conflict

i can buy from lots of websites in NY that won't collect sales tax because they don't have any affiliates here

Re:the affiliates are a sales force (3, Interesting)

lbmouse (473316) | about 5 months ago | (#45577589)

I'm torn a bit torn on this... if the are paid by 1099-misc then they are private contractors. If they are paid by W2, then they are a true "employed" sales force. I guess I don't know where the substantial nexus line is drawn.

Re:the affiliates are a sales force (2)

alen (225700) | about 5 months ago | (#45577671)

even if its 1099's, they are a business agreement to sell amazon products in that state

Why is this so difficult? (0)

Anonymous Coward | about 5 months ago | (#45577503)

Every business collects sales taxes according to the location of the sale, not of the buyer's home address.

If the seller is based in California, then that seller collects California sales taxes as the selling party of the transaction. It's their tax burden, and they're represented in California, so there's no representation issue. All other states can go punt, since they don't have that seller based in their state.

State "use taxes" are not an excuse, and are a type of double taxation. The state taxes UPS or FedEx for their selling their services (sales tax) and they try to tax the recipient of that package for "using" the state's infrastructure. That tax, theoretically, should have been covered by the tax on the shipping service.

tl;dr - Simple fix: seller collects sales tax, use taxes go away, states quit bitching about loss of revenue that isn't theirs to begin with.

Re:Why is this so difficult? (2)

Aaden42 (198257) | about 5 months ago | (#45577669)

Simple reason why not: Rhode Island (to pick the smallest state) passes a law saying sales tax 1% for all online sales. Every online retailer “moves” to RI, and every other state loses piles of revenue.

Emphasizing the “use tax” aspect requires tax be paid where the product is in fact “used” and makes it harder to game the system. Unless you happen to have a very accommodating friend/relative in a particular low-tax state, you pay what your local law makers have decreed. No tax havens emerge.

sounds great, minus the quote marks (2)

raymorris (2726007) | about 5 months ago | (#45577807)

Companies move to states that have low taxes, good infrastructure, where people need the jobs, etc. That sounds like a win to me - it works better for everyone except maybe the bureaucrats who did a crappy job, having high taxes but not using it to build strong infrastructure, a strong workforce, or anything else that attracts business.

ps yes I'm assuming taxed where they operate (1)

raymorris (2726007) | about 5 months ago | (#45577875)

Yes, my comment above is predicated on these companies being taxed where they primarily operate, not where they file incorporation. That shouldn't be too tough.

Alternate universe (0)

Anonymous Coward | about 5 months ago | (#45577877)

Perhaps you reside in an alternate universe where Amazon, Google, American Express, etc are located in Mississippi. In fact why don't you move there and try to get a decent education of medical care.

Re:Why is this so difficult? (1)

egcagrac0 (1410377) | about 5 months ago | (#45577715)

Around here:

What if I already paid tax in another state? [wi.gov]

Wisconsin allows a credit, for sales tax properly paid in another state, against use tax due. If you properly paid sales tax in another state, the sales tax paid may be used to offset the Wisconsin use tax due. See Wisconsin Tax Bulletin #157, page 28 for further information. Foreign taxes and customs duty charges are not eligible for this credit.

I have to believe that there is similar language in 49 other places.

Marketplace Fairness Act seems DOA (1)

JoeyRox (2711699) | about 5 months ago | (#45577539)

Haven't heard much about MFA since it passed the Senate. Studies I've read say it's a non-starter for the majority of constituents. That means it's going to take some extra palm greasing by corporations. Congressmen don't act against the will of people for cheap!

Relevant law link on a lawless wiki (0)

Anonymous Coward | about 5 months ago | (#45577543)

Here's a collection of citations [wikipedia.org]. If you accept the summary provided, it has no precedent in this case. Quill was charged because their software was in use by North Dakotans, while this case is about retailers that have business arrangements to avoid the letter of the law in regard to 'business presence'.

Missing a (0)

Anonymous Coward | about 5 months ago | (#45577549)

The first sentence is missing a word.

The Commerce Clause (0)

Anonymous Coward | about 5 months ago | (#45577581)

The most invasive Government power grab that exists in the US* today!

*soon to be more exploited by a Corporation near you

Get Ready... (3, Interesting)

BlueStrat (756137) | about 5 months ago | (#45577621)

Get ready for amazon.ag and overstock.ag.

At least, if I were in charge at Amazon.com or Overstock.com, I'd be looking to move the business out of the USA. As a bonus (outside of avoiding overly-burdensome US tax/regulation bureaucracy and costs), they could offer any US copyrighted work for sale from Antigua without any consideration for US copyright holders.

Strat

Re:Get Ready... (1)

jythie (914043) | about 5 months ago | (#45577681)

Well, that is the current dream of many.. find ways to have all the benefits of operating in the US without paying for it. Taxes are something that it is in one's best interest to have other people paying.

Re:Get Ready... (3, Insightful)

CohibaVancouver (864662) | about 5 months ago | (#45577805)

At least, if I were in charge at Amazon.com or Overstock.com, I'd be looking to move the business out of the USA

And when your HDMI cable hit the US border you can enjoy paying any duties, taxes & customs brokerage fees that apply to a shipment from Antigua.

Re:Get Ready... (2)

Stormy Dragon (800799) | about 5 months ago | (#45577847)

So your prediction is that in order to avoid paying sales taxes, Amazon is going to start paying far larger excise taxes and customs fees instead?

Re:Get Ready... (1)

bob_super (3391281) | about 5 months ago | (#45577867)

I am looking forward to the Customs and Border Patrol's reactions to Amazon's fleet of drones flying packages in from Antigua.

Need to buy a house near the coast and some defense stocks, the fireworks will be awesome!!

Re:Get Ready... (1)

xaxa (988988) | about 5 months ago | (#45577891)

Wouldn't they be charged import taxes?

Play.com is^H^Hwas in Jersey, one of the small islands between Great Britain and France. It's a "Crown Dependency" of the UK, roughly comparable to the US Virgin Isles. It's not part of the EU. There was a loophole, where low-value items imported into the UK weren't charged VAT. Jersey is also considered part of the UK for postal prices, so the postage cost was the same for a business there as in, say, Manchester.

That led to Play.com and others selling DVDs and CDs to the UK, until April 2012 when the loophole was closed, and January this year when they shut down the Jersey warehouse.

http://www.bbc.co.uk/news/world-europe-jersey-20953357 [bbc.co.uk]

(Guernsey and the Isle of Man are the other two tax havens in the British Isles, although we have plenty more spread around the world.)

Amazon.co.uk, .de, etc are already based in Luxembourg, to avoid as much tax as possible while remaining within the EU.

No explanation? (0)

sl4shd0rk (755837) | about 5 months ago | (#45577623)

FTFA: As is its custom, the court gave no explanation for turning down petitions from Amazon and Overstock.com
Explanation is, more money got put into the lobbying coffers of the side screaming "Yes!Yes! More glorious cash!"

The court gave no explanation (1)

fnj (64210) | about 5 months ago | (#45577833)

We are the fucking supreme court. We don't have to wait our turn in the restaurant, and we certainly don't have to give a reason for our arbitrary decisions. Not even the decision not to decide. There is nobody who can touch us, bitch.

Impeachment? BWAHAHAHAHA!

Unless I'm mistaken (0)

Anonymous Coward | about 5 months ago | (#45577855)

Unless I'm mistaken, sales tax is determined by the states and enforced by the states. This is a state's rights issue. Even "good Republicans" should want this kept out of the courts.

Sales tax is stupid, we already pay state income tax. Some states don't sale tax food, some don't. Some states like Ohio only do food sales tax if you eat-in. Sigh. ...and unless I'm crazy, some states make you pay sales tax on online purchases anyway....

Nope (0)

Anonymous Coward | about 5 months ago | (#45577879)

First, of course the supreme court won't here it because it would get in the way of government money.

Second, NO the law is NOT in effect. Other states laws and court rullings do not apply across state boundaries. Any corganization selling something to somebody in New York (or anyplace else) that is not in the same state, needs to simply ignore it, as I do. Make the state take it up with the resident, and don't share any information with New York.

New York doesn't like to obey ANY federal law, such as the right to keep and bear arms, the right to be free of unreasonable search and seizure, the right to peacefully assemble, etc. etc.

The State of New York, and New York City, do not stand behind the law, and so they do not have the weight of law. They have become gangster organizations, and nobody is obligated to obey ANY law they claim.

and for those of we IN the chain... (1)

themushroom (197365) | about 5 months ago | (#45577943)

I'm a Washington resident so I'm in the statistical minority that do pay tax on Amazon's goods. The ruling doesn't help those who live in the place where the business is located, understandably, only those who do not -- and in the case of Amazon, since the source can be anywhere, that list of "nots" is rather subjective or narrow in light of 'substantial nexus'.

Ignore it. (0)

Anonymous Coward | about 5 months ago | (#45578019)

Ignore New York and make THEM take it to the supreme court.

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