Fight the "Amazon Tax" in your state

[imschur]

States are desperate to find cash anywhere they can. They are seeking ways to make online retailers collect taxes. Currently online retailers only collect taxes for states if they have a physical presence in the state. So the tax geniuses in several states had a brainstorm. They want to force online retailers to collect taxes based on affiliate links and advertising.

This site is an example of that. All those banners on the side of the forum are "affiliate links". Based on this the state of Connecticut where I live will require all those companies to collect taxes from Connecticut residents for purchases made because of my relationship with those companies.

Affiliates do not touch a product, do not sell anything and are not employees of these companies.

Historically businesses terminated all affiliate relationships (terminated funding) in the states that have passed these laws. The result is no taxes are collected.

In fact these laws have a detrimental effect on state tax revenue. Folks like me actually have to pay personal income tax  on the money made in these affiliate relationships. That taxable income will be gone. Furthermore the money that's left after taxes goes to things like web hosting, server rental,internet connection,software,support, gas for trips to the gunshop, starbucks hot chocolate, donations to the NRA,CCDL,NRA ILA, SAF etc.

The "Amazon Tax" has already passed in a few states. A bunch more getting in line. The tax is named after Amazon because they are the biggest player. They arent opposed to collecting taxes they just want it fair and one tax an internet tax thats the same for everyone.

Make no mistake this will affect almost every website you visit that has an advertisement linking back to a retailer. This is how popular websites are funded.

Currently Amazon.com has taken the State of New York to court on this.

Ill post some links later with more information.

[rodent.22]

It's impossible to control public employees who control taxation and gain their very income thru these same taxes. This is a cash cow which absolutely flies in the face of common sense. You and I must curb OUR spending when times get bad, these bastards just raise the tax rate. That national CESSPIT, our Congress has set the tone since the beginning of the country, paving the way for the locals to abuse us even further.

[imschur]

If they are reaching this far with such insanity whats next? Taxes collected because tv commercials show in your home state?

[rodent.22]

Vote me in as KING- I'll clean that mess out....KING RAT!!!!

[imschur]

all hail the rat king  ;D

[imschur]

From the Wall Street Journal

Governor Pat Quinn recently added to his reputation as America's most taxing politician by signing a law applying the state's 6.25% sales tax to Internet purchases made in Illinois. Within hours, Amazon, the online book and merchandise seller, announced it would discontinue using any of its 9,000 Illinois small business affiliates to avoid having to collect the tax. Congratulations, Governor.

The issue of whether and how states should tax Internet sales is back as one of the hottest in state legislatures. Colorado, New York, North Carolina and Rhode Island already impose some version of what has become known as the "Amazon tax," and at least a dozen other deficit-plagued states are advancing similar bills. This political brawl unites liberals with brick-and-mortar retailers, such as Wal-Mart, Best Buy and Target, against taxpayers and such online retailers as Amazon and Overstock. Internet sales reached $165 billion last year and have been growing by nearly 15% annually.

The first issue is whether the Amazon tax is constitutional. New York's law is now being challenged in court as a violation of the Supreme Court's landmark 1992 Quill decision. In that case the High Court ruled that a state cannot impose a tax on a company if it does not have a physical presence in that state.

This decision originally applied to mail order sales, but the same principle applies to firms that sell over the Internet. If the company does not have an office, store or warehouse inside a state, the state cannot compel the firm to collect sales tax. Illinois and others are trying to broaden the concept of physical presence to include doing business with any affiliate inside the state's borders, such as online advertisers.

The Quill standard may be the last line of defense against what would become a raid by governments at all levels on interstate online commerce. One virtue of the U.S. federal system is that it allows states to compete on tax policies. The courts should insure that a firm has a genuine physical presence in the state—not merely an online presence—to impose its taxing power. States retain the right to collect a "use tax" from their residents who make purchases from out-of-state companies or over the Internet.

Even if the courts rule against online sellers, states are fantasizing if they believe this tax will raise as much money as they hope. As in Illinois, Amazon has announced that it will cease doing any business with affiliates in any state that imposes this tax, and the firm hasn't been bluffing. So far it has closed its affiliate program in every state with the tax, except New York (where the law is under challenge).

Paul Dion, head of Rhode Island's revenue analysis office, says that "To date nobody has come forward to remit sales tax to us under that [online sales tax] statute." North Carolina's tax office reports that the state had raised all of $4.6 million as of January from the new tax, a small fraction of what legislators predicted. A study by the Tax Foundation has found that because of the retaliatory steps taken by Amazon, Rhode Island and North Carolina may have lost money because online marketing companies have closed down, or relocated outside the state.

Retailers are understandably worried about competition from online sellers, and there is no doubt that sales taxes influence where and how people make purchases. One irony of this fight is that the same liberals who claim that taxes don't affect behavior are telling state legislators to tax Internet sales or people will buy everything online or outside the state to avoid paying taxes.

The big retailers say that imposing state sales tax on e-commerce will level the playing field. But Internet firms don't use government services in the way that retailers do. If Amazon's headquarters in Seattle catches fire, no Illinois fire fighter is going to put it out. It also seems an undue burden to require Internet firms to comply with 8,000 separate sales tax jurisdictions around the country. The retailers have tried for years to get Congress to approve a "streamlined sales tax" compact among the states as a way to collect Internet taxes, but this seems unlikely to pass and many states would refuse to join in any case.

The best outcome would be for states to begin to rethink their tax policies in this new era of e-commerce. For states to impose sales taxes as high as 8% or even 10% may no longer be feasible, much as a U.S. corporate tax rate of 35% is no longer competitive with the rest of the world.

Smart states are rethinking their spending commitments, and they will also have to adapt by broadening their sales tax base and lowering rates. Many states exempt about half of their consumption base from sales tax, including groceries, barbers, drugs, legal services, hospitals and more. States could broaden the base and cut their rates in half.

The biggest false claim is that e-commerce will bankrupt states. This is what retailers and state legislatures said after the Quill decision, but sales tax receipts soared in the decade afterward. The most important influence on state tax receipts is economic growth, and revenues in some states are already returning to their pre-recession peaks.

If Governor Quinn weren't so busy driving business out of Illinois, he might not have to pretend he can raise revenue from taxing the Internet.

[asmurff]

If states are grasping at pennies here and nickles there they've already done themself in, unless they are willing to turn off the spending they're screwed. Americans need to start taking care of themselves and not expect the government to do it.

[imschur]

Connecticut passed their tax law. This will most likely eliminate all of my site funding. One advertiser Moosjaw, has already terminated our relationship. Brownells and Amazon wont be far behind.

Sad day today for me. A lot of hard work and a serious investment of time and money going down the tubes

[techmike]

Truly sucks. How did we lose control of our country?

[imschur]

Newegg has now dropped me.

This thought process to use guys like me to go after online retailers is mind boggling

[bdavison]

So obviously, this is negatively affecting the websites cash flow....do you think you be able to weather the storm or is this going to cause the site to go down?

[asmurff]

I've seen more job/income killing laws and policies come out in the last 2-1/2 years than in anytime in my lifetime.

First Great Lie: "We're from the governemnt and we're here to help."

[imschur]

I will most likely kill off some of my other sites and curtail future expansion plans for now.

Fortunately I can pickup some side IT work to cover the expenses until I can find an alternate path for funding.

I will fight for my four primary sites. I wont go down easy.

make no mistake this will affect many sites and forums. 45 states have recently adopted this tactic.

[imschur]

It seems there's a small loophole for now. An advertiser can choose to not track traffic or make any payments based on sales to CT. This should all shake out in the next week or so.  Cross your fingers guys.

[Michigan Joe]

All States charge sales taxes except for Delaware. What the States want is to collect tax on every transaction. With the underground economy, collection of sales tax is more important to the budgets of the various local governments  As the federal government tries to balance the budget, it will pass the cost of services to the States and the States will need more money.

I expect that the Feds will eventually pass a law that works like the unemployment tax and estate tax. If you pay the tax to the State, you get a credit toward your federal taxes. If not, you pay it to the Feds. So, you pay it one way or another. In the end, I predict Amazon will be forced to collect sales tax for all the states. It will happen when California files for bankruptcy, which should not be too many years from now. The Feds will have to help collect sales taxes or bail California out. As Congress does not care about helping anyone but Wall Street and the banks when it comes giving money away, I think they will squeeze us for the sales tax.

I've been working with taxes for 37 years now. Federal tax revenues fell 20% from 2008 to 2009. As the middle class disappears, the income tax they paid disappears. 50% of the people in the US do not pay federal income tax because they do not make enough money. Yet, the estate tax, which only taxed the rich, was reduced. Income taxes for the rich have been reduced to 33%. By buying in to the idea that the progressive income tax rates should not be applied to the rich people, we will get stuck paying more taxes.

I'm not against people making money. And i personally do not like to pay taxes  However, I believe that the major reason why a person gets rich in America is because the common people pay the gas tax that build the roads that enables commerce, pay the State and local taxes that provide  companies with an educated workforce and send their sons and daughters off to war to protect the right to engage in free enterprise. There is a reason why all the companies do not move to Costa Rica  There is no infrastructure, no highly educated work force and no US Army to protect you if push comes to shove  As a result, I say tax the people who can afford to be taxed or else the government us going to get the money from you and I.  End of Rant.

[imschur]

The big complaint that the online retailers have is that there are too many tax jurisdictions to follow. It's not just state sales taxes but also local sales taxes in some areas. It would be a monumental and expensive task to stay on top of A flat interner tax would solve that.

That said local governments considering a website with a banner ad or links as a physical presence of a company is just insanity

[Michigan Joe]

No question that a banner ad is not a physical presence. That's the same as direct mail or newspaper/magazine ads.

I think the argument that collecting tax would be a burden won't hold up as a computer can handle that easy. Until the federal gov taxes for the states, one state can't tax another state's transactions without a physical presence. Why doesn't someone fight it?  Seems to be a fairly simple question and a lot of money is involved.

[imschur]

Amazon is fighting it in NY. It's going to be a constitutional fight. It's really Amazon versus Walmart and Target. They, Walmart and Target lobbied for this. Ironic that the companies that killed the brick and mortars are crying foul and fighting on behalf of those they already put out of business.

heres a little more on it http://performancemarketingassociation.com/pma-sues-state-of-illinois 

[imschur]

Got another email today. Amazon terminated my contract.

For well over a decade, the Amazon Associates Program has worked with thousands of Connecticut residents. Unfortunately, the budget signed by Governor Malloy contains a sales tax provision that compels us to terminate this program for Connecticut-based participants effective immediately. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by Connecticut-based affiliates like you - even if those retailers have no physical presence in the state.We opposed this new tax law because it is unconstitutional and counterproductive. It was supported by big-box retailers, most of which are based outside Connecticut, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

[rodent.22]

That's not a rant, that's a FACT!!!! :thumb:

[Michigan Joe]

"The ability to tax is the ability to destroy."

It definitely looks like Conn wants to destroy its small businesses. It is a shame and a waste. Bottom line appears to be that the Big Box stores' lobbyists spent a lot if money.

[lmao_37]

It sounds like pure madness, big box stores are trying to destroy small business so everyone has to shop with them, Conn with drive out all small business and drive up unemployment and tax's will have to be raised to cope, In the early 90's the UK government brought in a poll tax instead of being brought against a house it was aimed at the people so 1 house with 4 residents would  pay $300 a year but with the poll tax it 4 people x $300 each so $1200 local city's got Greedy and raised the poll tax to the maxium but what happened was it induced a recession and cost Margret Thatcher her job as the prime minister. Sorry i hate taxes and rant a little as tax = being robbed

[imschur]

Here's a very good read about what's going on.

AUSTIN, Texas – State governments across the country are laying off teachers, closing public libraries and parks, and reducing health care services, but there is one place they could get $23 billion if they could only agree how to do it: Internet retailers such as Amazon.com.

That's enough to pay for the salaries of more than 46,000 teachers, according to the U.S. Bureau of Labor Statistics. In California, the amount of uncollected taxes from Amazon sales alone is roughly the same amount cut from child welfare services in the current state budget.

But collecting those taxes from major online retailers is difficult.

Internet retailers are required to collect sales tax only when they sell to customers living in a state where they have a physical presence, such as a store or office. When consumers order from out-of-state retailers, they are required under state law to pay the tax. But it's difficult to enforce and rarely happens.

That means under the current system the seller is absolved of responsibility, buyers save 3 percent to 9 percent because they rarely volunteer to pay the sales tax, and the state loses revenue.

With sales tax revenue slumping more than 30 percent in most states between 2007 and 2010, lawmakers across the country are grasping for ways to collect those unpaid taxes. Retailers and lawmakers in several states have proposed ways to solve the problem, some with more support than others.

"The problem is that some out-of-state e-retailers openly flaunt the law, arguing that it doesn't apply to them," said Texas state Democratic Rep. Elliot Naishtat, who has offered a bill to require more Internet sellers to collect Texas sales tax. "It's about potentially generating hundreds of millions of dollars for our state."

Texas cut $24 billion in state services to cover its revenue shortfall. That included decisions not to fund the expected growth in the number of public school students and the expected growth in the caseload for Medicaid, the health care program for the poor and disabled.

Internet retailers cite a 1992 U.S. Supreme Court decision involving catalog sales, Quill Corp. v. North Dakota, which ruled that states could require only companies that had a physical presence within the state to act as tax collector.

To get around the ruling, some states are expanding what it means to be physically present. For example, an online retailer hiring a marketing firm or owning a subsidiary inside the state would qualify under definitions adopted in some states.

In February, the Texas comptroller demanded that Amazon.com pay $269 million in back sales taxes because a subsidiary operated a warehouse near Dallas. Amazon is appealing the order.

Last year, New York enacted a law that said Internet retailers' practice of paying commissions to marketing agents based within the state constituted a presence. Arkansas, Colorado, Illinois, Rhode Island and North Carolina quickly followed with similar laws.

Bills are pending in Arizona, California, Florida, Hawaii, Massachusetts, Minnesota and Pennsylvania. Texas lawmakers passed such a measure, but Gov. Rick Perry vetoed it. Now legislators are trying to resurrect the bill by attaching it to a larger budget measure. The matter is now before a conference committee.

California estimates it loses at least $200 million a year in uncollected tax from online sales, $83 million from Amazon.com alone. A bill that has passed the state Legislature would force Seattle-based Amazon and others to collect that tax from California residents.

Amazon, Overstock.com and other big Internet retailers cite the Quill decision as their primary defense against collecting sales taxes, but they also argue that collecting tax in the District of Columbia and the 45 states where a sales tax exists would be extremely complex and expensive.

"There are over 8,000 taxing jurisdictions in the United States," said Jonathan Johnson, president of Overstock.com, which has offices only in Utah. "We think it's wrong that states are trying to cause out-of-state retailers to be their tax collectors."

After all, Johnson said, these retailers do not use any state services where they don't have offices.

To avoid having to collect sales tax, Amazon threatened to close its warehouse in Texas, cut off marketing affiliates in Illinois and North Carolina and sued New York claiming the law there is unconstitutional.

Earlier this month, Amazon severed ties with website affiliates in Connecticut after the governor signed into law a state tax on online purchases that is expected to raise $9.4 million.

The movement by states to force online retailers to collect sales taxes is more than just an attempt by government to get more money. It also highlights a rift in the business community.

Traditional retailers are complaining loudly to their elected officials, saying the current structure creates an unfair playing field.

Wal-Mart, Target, Best Buy, J.C. Penney, Sears and other traditional retailers have formed The Alliance for Main Street Fairness to push for more stringent tax laws on Internet retailers. Brick-and-mortar stores saw sales plunge 9.1 percent between 2007-2009, while online merchants saw sales rise 4.8 percent, according to the latest data available from the U.S. Census Bureau. Wal-Mart's comparable store sales were down nearly 1 percent in 2010.

The alliance is pushing to expand the definition of physical presence, state-by-state, to force big online retailers to collect state sales tax.

When Texas lawmakers took up such a bill, most of the testimony came from owners of small businesses. Gregg Burger, the general manager of Austin's Precision Camera, complained that customers come into his store to inspect the products, but then go online to buy them to avoid the sales tax.

"We get people all the time who come in, talk to a salesman for 15 minutes to half an hour ... and then go, and we know they are going to buy it online because they can save money. In theory, they are stealing our time," Burger said. "We're losing at least 15 percent to online, out-of-state, so we're losing anywhere between $3 million and $5 million a year in business."

While state laws would help, Burger said he would like to see a national solution.

"We should be picking on everyone who ships into every state," he said.

But local Internet marketers that link to major Internet retailers complain the laws would hurt them. In Illinois and other states where such laws have passed, Internet retailers cut their ties with local web sites.

Johnson, of Overstock, said the traditional retail giants are just getting a taste of their own medicine.

"Local retailers complained that the big-box stores were coming in and taking their business, and the Wal-Marts of the world said they had a better business model and the world has changed," Johnson said. "Today, the business model has changed and we can take cost out of the supply chain by doing business the way we do on the Internet. And for Wal-Mart, of all people, to be saying it's not fair that Amazon and Overstock can't be forced to be tax collectors is ironic."

Representatives for Wal-Mart and Target declined to comment for this story.

While the U.S. Supreme Court sided with online retailers in its Quill decision, the ruling also said Congress should pass a law standardizing sales tax collection under the Interstate Commerce Clause. Perry, the pro-business and states-rights Texas governor, said in his veto message that a national solution is the only way to settle the issue.

Traditional retailers have lobbied for the Main Street Fairness Act, which was reintroduced in Congress this spring by Sen. Dick Durbin, D-Illinois. The act would be "a helping hand to state and local governments at a time that they need it the most," he said.

While few think the Republican-controlled House of Representatives will pass a bill that critics have called "a tax on the Internet," the sudden flurry of action in state legislatures and lobbying by big retailers could provide a boost to efforts to pass such a law, even among conservatives.

Those lawmakers find themselves in a bind between opposing taxes and supporting traditional businesses.

"Republicans and Democrats alike recognize that there is an inequity here," said Danny Diaz, a spokesman for the Alliance for Main Street Fairness.

A component of the proposed federal law is a requirement for states to adopt the Streamlined Sales and Use Tax Agreement, which would standardize sales tax laws and filing requirements for Internet retailers. To sweeten the pot, states would reimburse companies for any additional costs involved in collecting it.

Already, 24 states have adopted the streamlined sales tax, while 1,500 companies have voluntarily collected $700 million in sales tax revenue since 2005 using the system, said Scott Peterson, executive director of the Streamlined Sales Tax Governing Board. The volunteer retailers represent only a fraction of online sales.

Overstock's Johnson and Paul Misener, vice president for global public policy at Amazon, said they would support a national standard using the Streamlined Sales and Use Tax Agreement.

"We've long supported a truly simple, national approach, evenhandedly applied," Misener said. "This is federalism at work, and many states are making the right decision to seek a federal solution."

[rodent.22]

Fact is- When times get bad in the car business my pay is CUT. In a lot of other businesses also. ALL tax-supported institutions, government or collegiate, cut the services people, janitors and maintenance. The higher ups go swilling to the public TROUGH for more money, to support themselves at THEIR present levels of income. If the level of tax revenue is lowered by 30%, then by God and gunpowder drop ALL their pay by 30%. It would be less unemployment and the budgets would be balanced. The free ride for these bastards needs to be OVER....

[imschur]

Amazon ends deal with 25,000 California websites http://www.ocregister.com/articles/amazon-306409-affiliate-california.html