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SCOTUS rules that states can tax Amazon

You appear to be partially correct. I went and checked my Amazon orders over the last 18 months (over 100 orders). About half of them were sold by third parties and fulfilled by Amazon - but I did pay tax on many of those 3rd party orders (about 50% of them) So, in my limited and totally unscientific survey, Amazon isn't paying taxes on roughly 25% of their orders (your results may differ).

Note: What is also interesting is that I've paid tax on every item but one that I ordered in 2018, so maybe something changed this year.


Have you checked you Amazon Marketplace orders, if you have any?
 
This is bad for small online sellers. Not only will the small guys have to shell out $$$$ to integrate tax collecting software, they will be subject to over 10,000 tax authorities and therefor 10,000 audits. (granted many states collect at the state level and then pass down to the municiple/city sales tax authority, but still this could be very bad for the SMB community. )

Yep it might be easy for Amazon to collect taxes. What about the little guys that sell to 50 different states? What a mess (investment) this will be.
 
Yep it might be easy for Amazon to collect taxes. What about the little guys that sell to 50 different states? What a mess (investment) this will be.
Amazon collects it for them. Better for the small guy to collect and remit than it is for the states to come in three years later and enforce collection.
 
Amazon collects it for them. Better for the small guy to collect and remit than it is for the states to come in three years later and enforce collection.

Sorry PSUalt, I should have been more clear. Let's say that I am NOT associated with Amazon. I have my own website and I sell "wiggets" to 50 different states. Gross per year $20,000.00 (small retailer). If I "understand" the new ruling I will now have to figure out taxes for all the sales to the 50 different states and the tax laws for those states. Correct???
 
Sorry PSUalt, I should have been more clear. Let's say that I am NOT associated with Amazon. I have my own website and I sell "wiggets" to 50 different states. Gross per year $20,000.00 (small retailer). If I "understand" the new ruling I will now have to figure out taxes for all the sales to the 50 different states and the tax laws for those states. Correct???
Understood. That would be difficult and will create a burden for them. Ive seen the flip side where states have played a game of gotcha with small online retailers running very loose interpretations of the law knowing that they don’t have the resources to fight them.
 
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This is bad for small online sellers. Not only will the small guys have to shell out $$$$ to integrate tax collecting software, they will be subject to over 10,000 tax authorities and therefor 10,000 audits. (granted many states collect at the state level and then pass down to the municiple/city sales tax authority, but still this could be very bad for the SMB community. )
I disagree. A lot of small online companies are being forced to remit to the various states now under complex and varying rules. Companies such as Amazon will have to step up and assist (although the capability is already there) or risk losing sellers. Now the online sellers will compete on a level playing field.

I am not talking about the Amazon / eBay sellers. I am talking about the $1m to $30 company that operate their own sites. I am more concerned with the regulatory/audit issues than with the collection.

Can't wait for "Hey, Boss? I have Tom Twinkle from Shithole Tow, New Mexico on line 2. He is notifying us that they will be conducting a sales tax audit for the last 5 years even though the law was just passed last June. He is requesting all sales receipts and invoices.". "Oh, by the way Seattle is on line 1 and the state of Massachusetts is waiting in the lobby."
 
I went through a PA sales/use tax audit in 2017. Took the Commonwealth 9 months and it was a PIA. In the end we had bought some equipment from a supplier in Tennessee and we never claimed it here in Pa. That was it after 9 months 9f them digging. We wrote a check for $4,300 and called it a day.

One freeking item (rather large one) out of 1000's of transactions, 9 months of the Commonwealth time and our time for $4,300? Can't wait until two are three states are auditing at the same time.
 
and any other online shopping. A big win for states and for big box brick & mortar businesses. (Once again, Obliviax has no opinion).


WASHINGTON (AP) — The Supreme Court says states can force online shoppers to pay sales tax.

The 5-4 ruling Thursday is a win for states, who said they were losing out on billions of dollars annually under two decades-old Supreme Court decisions that impacted online sales tax collection.

The high court ruled Thursday to overturn those decisions. They had resulted in some companies not collecting sales tax on every online purchase. The cases the court overturned said that if a business was shipping a product to a state where it didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax. Customers were generally supposed to pay the tax to the state themselves if they don’t get charged it, but the vast majority didn’t.

Justice Anthony Kennedy wrote that the previous decisions were flawed.

“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” he wrote.

In addition to being a win for states, the ruling is also a win for large retailers, who argued the physical presence rule was unfair. Retailers including Apple, Macy’s, Target and Walmart, which have brick-and-mortar stores nationwide, generally collect sales tax from their customers who buy online. That’s because they typically have a physical store in whatever state the purchase is being shipped to. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third party sellers who use the site to sell goods don’t have to.

But sellers that only have a physical presence in a single state or a few states could avoid charging customers sales tax when they’re shipping to addresses outside those states. Online sellers that don’t charge sales tax on goods shipped to every state range from jewelry website Blue Nile to pet products site Chewy.com to clothing retailer L.L. Bean. Sellers who use eBay and Etsy, which provide platforms for smaller sellers, also aren’t required to collect sales tax nationwide.

The case the court ruled in has to do with a law passed by South Dakota in 2016. South Dakota’s governor has said his state loses out on an estimated $50 million a year in sales tax that doesn’t get collected by out-of-state sellers. Lawmakers in the state, which has no income tax, passed a law designed to directly challenge the Supreme Court’s 1992 decision. The law required out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state.

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair. The state conceded in court, however, that it could only win by persuading the Supreme Court to do away with its physical presence rule.

The Trump administration had urged the justices to side with South Dakota.

The case is South Dakota v. Wayfair, 17-494.​
Nothing to do with the post, but what the heck is the picture you have included?
 
Amazon collects it for them. Better for the small guy to collect and remit than it is for the states to come in three years later and enforce collection.

Sorry PSUalt, I should have been more clear. Let's say that I am NOT associated with Amazon. I have my own website and I sell "wiggets" to 50 different states. Gross per year $20,000.00 (small retailer). If I "understand" the new ruling I will now have to figure out taxes for all the sales to the 50 different states and the tax laws for those states. Correct???

Not just the 50 states, but the local sales tax laws also. There are over 10,000 entities that collect some sort of sales/use tax.
 
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Not just the 50 states, but the local sales tax laws also. There are over 10,000 entities that collect some sort of sales/use tax.

Now the fun begins. SCOTUS decision did little, if anything. to determine locus of taxation.On an entity like LL Bean it's easy to determine. On Ebay, not so much. And I have no doubt that a myriad of small direct sellers will tell state treasury departments to come get me.
 
Yeah, but half of it's business is processing transactions for third-party sellers. When those guys get pinched, Amazon will feel it.

Yeah, Amazon will feel some "pinching" from their existing third-party sellers, but this is actually going to push more small/medium e-commerce businesses TO Amazon. On the net, this is an easy win for Amazon.
 
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Have you checked you Amazon Marketplace orders, if you have any?

Unless my understanding of the Amazon Marketplace is wrong, then yes I did check those orders. I believe marketplace orders show up in your Amazon order listings but are defined as "Sold by: XYZ Company". Approximately 50% of my Amazon orders were through the marketplace and about 50% of those had a sales tax collected. But, as I said, only one item in 2018 was tax free - and that was an order from back in January. That's what threw me off when I said that all my Amazon orders had a sales tax attached. Originally, I just checked back for the last 3-4 months and all those items did have sales tax. That could just be a coincidence though. .

These were the companies I ordered from:

1byone Products Inc.
Sunvalley Brands
AnkerDirect (3)
HUANUO US
Mediabridge
Huppins
Aukey Direct
OtiumDirect
EufyHome (2)
Sunvalley Brands
KOUSI

The KOUSI purchase (a wire shelving bookcase) was the only one that I didn't pay sales tax on.
 
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Unless my understanding of the Amazon Marketplace is wrong, then yes I did check those orders. I believe marketplace orders show up in your Amazon order listings but are defined as "Sold by: XYZ Company". Approximately 50% of my Amazon orders were through the marketplace and about 50% of those had a sales tax collected. But, as I said, only one item in 2018 was tax free - and that was an order from back in January. That's what threw me off when I said that all my Amazon orders had a sales tax attached. Originally, I just checked back for the last 3-4 months and all those items did have sales tax. That could just be a coincidence though. .

These were the companies I ordered from:

1byone Products Inc.
Sunvalley Brands
AnkerDirect (3)
HUANUO US
Mediabridge
Huppins
Aukey Direct
OtiumDirect
EufyHome (2)
Sunvalley Brands
KOUSI

The KOUSI purchase (a wire shelving bookcase) was the only one that I didn't pay sales tax on.
Wire shelving not taxed in PA. TIC
But the real challenge will be to determine what is or isn't taxable in which state. Do all states tax clothes? Some don't. Food ? I know in WV good isn't taxed but believe it is in Ohio. Interesting times
 
It is good for your own self interest to shop locally when ever possible. Amazon and EBay are my sources fir things that I can not find locally. BOGOs at all major chains make them more than competitive with on line.
 
Unless my understanding of the Amazon Marketplace is wrong, then yes I did check those orders. I believe marketplace orders show up in your Amazon order listings but are defined as "Sold by: XYZ Company". Approximately 50% of my Amazon orders were through the marketplace and about 50% of those had a sales tax collected. But, as I said, only one item in 2018 was tax free - and that was an order from back in January. That's what threw me off when I said that all my Amazon orders had a sales tax attached. Originally, I just checked back for the last 3-4 months and all those items did have sales tax. That could just be a coincidence though. .

These were the companies I ordered from:

1byone Products Inc.
Sunvalley Brands
AnkerDirect (3)
HUANUO US
Mediabridge
Huppins
Aukey Direct
OtiumDirect
EufyHome (2)
Sunvalley Brands
KOUSI

The KOUSI purchase (a wire shelving bookcase) was the only one that I didn't pay sales tax on.

Just to clarify, a Marketplace deal is one "Sold by XYZ", but not "Fulfilled by Amazon."

I've never been charged tax on a Marketplace deal, am always taxed on purchases from Amazon, and those "Fulfilled by Amazon" are a mixed bag. Have inquired of various sources at Amazon (none of which are Customer Service, which is useless in more ways than one) and no one can explain it, even to their satisfaction. Having said that, I expect there to be more uniformity in Amazon's practices going forward.
 
Yeah, Amazon will feel some "pinching" from their existing third-party sellers, but this is actually going to push more small/medium e-commerce businesses TO Amazon. On the net, this is an easy win for Amazon.

Don't bet on it. Amazon isn't.
 
well, if they have no presence in a State, they are not costing the State for infrastructure costs.
I agree to an extent but how is a purchase delivered to a customer who lives in a state where the seller has no physical presence? It needs to be shipped in some manner and the shipping infrastructure (highways, airports, etc.) is almost always paid for and maintained by state.

As for shipping costs, I always thought they were in place to pay UPS, FedEx, USPS, etc. They won't move the product for free.
 
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Yeah, Amazon will feel some "pinching" from their existing third-party sellers, but this is actually going to push more small/medium e-commerce businesses TO Amazon. On the net, this is an easy win for Amazon.
does it really matter? When you sell at 217 x earnings, do you really think it would affect the stock price? I mean take a Macy's that sells at 7.5 times earnings!!
 
Just to clarify, a Marketplace deal is one "Sold by XYZ", but not "Fulfilled by Amazon."

I've never been charged tax on a Marketplace deal, am always taxed on purchases from Amazon, and those "Fulfilled by Amazon" are a mixed bag. Have inquired of various sources at Amazon (none of which are Customer Service, which is useless in more ways than one) and no one can explain it, even to their satisfaction. Having said that, I expect there to be more uniformity in Amazon's practices going forward.

The decision to charge tax is based on whether or not the selling company has a presence in the state of your shipping address.

- Amazon apparently has a presence in your state, hence always charging you tax.

- For marketplace orders (not fulfilled by Amazon), if XYZ has a presence in your state, you will be charged tax.

- For "Sold by XYZ, Fulfilled by Amazon" orders, if XYZ has a presence in your state, you will be charged tax. Furthermore, in this case, in the particular Amazon warehouse that is fulfilling your order is in your state, you may be charged tax as well.
 
My state (Arkansas) has had, for many decades, a "use tax" law that applies to consumers. This means that anything purchased outside the state and used within the state is subject to the tax rates that exist relative to the location of your domicile. If the sales tax rate you paid is less than your local rate for an item, whether zero or non-zero, then you are to pay the locality and/or state the difference. (The state collects and redistributes to localities.) I only learned of this law after moving here and reviewing my state income tax booklet, which included some sales tax forms and a brief notice of the law. To me they have been making a mistake by not having people notified and signed when they get a driver's license.

Of course, most people ignore or claim ignorance of the law and think they are getting a deal when an online order says "no sales tax." They are wrong. In not paying the tax they are behaving no different than someone who takes cash for their income and does not report it.

As for Amazon, they have a web page that lists states with such laws, informing you of your responsibility as a citizen. It was interesting to find that my state was not listed even though the law here is older than Amazon itself. When I notified Amazon of this omission my statement essentially got lost in their law department. I got a form letter response that Amazon was not responsible. I guess if a state taxing authority notified them of this simple omission they might put in the effort to add a name on a web page.

I made some rather large ("tax free") online purchases for our new home. The uncollected taxes amounted into the hundreds of dollars, which I voluntarily paid. I now keep a file of each online purchase to deal with the Use Tax.

I know that this tax provides, beyond infrastructure, much needed services within my state. People don't make much here and there are many in need. I think it is second only to Mississippi in terms of poverty. Yet despite their modest means and checkered ancestry (with roots in slavery, KKK, etc.), most here are genuine and friendly. I've probably seen less bigotry than in most places I've lived.

To be honest, I might feel differently if life here were not so laid back. If I lived in a large metro area or in one of the crowded states of the East or West I might look at my fellow man differently. For me, like giving to a charity, in paying an unenforcible "hidden" tax it essentially comes down to where the money is going.
 
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does it really matter? When you sell at 217 x earnings, do you really think it would affect the stock price? I mean take a Macy's that sells at 7.5 times earnings!!

I don't know if it will have an effect on the stock price. That depends on what investors think. All I'm saying is that it will be a net win for Amazon, the company itself.
 
I agree to an extent but how is a purchase delivered to a customer who lives in a state where the seller has no physical presence? It needs to be shipped in some manner and the shipping infrastructure (highways, airports, etc.) is almost always paid for and maintained by state.

As for shipping costs, I always thought they were in place to pay UPS, FedEx, USPS, etc. They won't move the product for free.


Yes, they pay the shipper who in turn pays the taxes for highways, airports, etc.

What if my purchase is software that I download, how is the State’s infrastructure burdened?
 
How could/would Amazon do to 'bet on it,' that they're not?

The decision to charge tax is based on whether or not the selling company has a presence in the state of your shipping address.

- Amazon apparently has a presence in your state, hence always charging you tax.

- For marketplace orders (not fulfilled by Amazon), if XYZ has a presence in your state, you will be charged tax.

- For "Sold by XYZ, Fulfilled by Amazon" orders, if XYZ has a presence in your state, you will be charged tax. Furthermore, in this case, in the particular Amazon warehouse that is fulfilling your order is in your state, you may be charged tax as well.

You should work for Amazon because you know more about their business than they do. When you apply make sure to tell them that you single-handedly saved Crocs from extinction.
 
You should work for Amazon because you know more about their business than they do. When you apply make sure to tell them that you single-handedly saved Crocs from extinction.

I haven't posted anything on this thread that Amazon doesn't already know.
 
Just to clarify, a Marketplace deal is one "Sold by XYZ", but not "Fulfilled by Amazon."

I've never been charged tax on a Marketplace deal, am always taxed on purchases from Amazon, and those "Fulfilled by Amazon" are a mixed bag. Have inquired of various sources at Amazon (none of which are Customer Service, which is useless in more ways than one) and no one can explain it, even to their satisfaction. Having said that, I expect there to be more uniformity in Amazon's practices going forward.

Correct. "Sold by XYZ" is how it appears on my orders and none of them said anything about fulfillment. 14 orders so far this year with taxes charged on 13 of them (all 12 of the orders that I placed in the last five months - last one I wasn't taxed on was ordered on January 13th).
 
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Correct. "Sold by XYZ" is how it appears on my orders and none of them said anything about fulfillment. 14 orders so far this year with taxes charged on 13 of them (all 12 of the orders that I placed in the last five months - last one I wasn't taxed on was ordered on January 13th).

I guess I must be luckier than you because I've never been charged tax, including on 2018 items, on Marketplace transactions and all of them would were subject to sales tax.
 
Not just the 50 states, but the local sales tax laws also. There are over 10,000 entities that collect some sort of sales/use tax.
This is exactly right. I did an analysis years ago for a small online retailer in Virginia, showing the tax nexus effect of having a warehouse in New York State. Every county in New York can add its own sales tax on top of the base state rate. That's 62 potentially varying rates in one state alone. Dealing with that on a national level requires software -- because we're too parochial a country to take the common sense approach and have a single national rate for online sales.

When confronted with spending tens of thousands of dollars on sales tax software (and the monthly fees to subscribe to the ever-changing databases), I'm guessing that many independent online retailers will be forced to go the Amazon reseller route and pay them the fees to deal with taxation. More consolidation toward large corporate entities.
 
This is exactly right. I did an analysis years ago for a small online retailer in Virginia, showing the tax nexus effect of having a warehouse in New York State. Every county in New York can add its own sales tax on top of the base state rate. That's 62 potentially varying rates in one state alone. Dealing with that on a national level requires software -- because we're too parochial a country to take the common sense approach and have a single national rate for online sales.

When confronted with spending tens of thousands of dollars on sales tax software (and the monthly fees to subscribe to the ever-changing databases), I'm guessing that many independent online retailers will be forced to go the Amazon reseller route and pay them the fees to deal with taxation. More consolidation toward large corporate entities.

That may happen eventually, but I'll guess that it will be quite a few years and court cases before we see a massive change in the landscape. The folks to watch are Ebay and Alphabet.
 
That may happen eventually, but I'll guess that it will be quite a few years and court cases before we see a massive change in the landscape. The folks to watch are Ebay and Alphabet.
Hope you're right, Art. This one begs for logic and deliberation.
 
Unless my understanding of the Amazon Marketplace is wrong, then yes I did check those orders. I believe marketplace orders show up in your Amazon order listings but are defined as "Sold by: XYZ Company". Approximately 50% of my Amazon orders were through the marketplace and about 50% of those had a sales tax collected. But, as I said, only one item in 2018 was tax free - and that was an order from back in January. That's what threw me off when I said that all my Amazon orders had a sales tax attached. Originally, I just checked back for the last 3-4 months and all those items did have sales tax. That could just be a coincidence though. .

These were the companies I ordered from:

1byone Products Inc.
Sunvalley Brands
AnkerDirect (3)
HUANUO US
Mediabridge
Huppins
Aukey Direct
OtiumDirect
EufyHome (2)
Sunvalley Brands
KOUSI

The KOUSI purchase (a wire shelving bookcase) was the only one that I didn't pay sales tax on.

I may have found an answer to why our perspective is different.

From an article in The Atlantic (I live in PA and, as I have noted, all my recent marketplace purchases did have a sales tax applied):

The ruling will not make a difference for shoppers who use certain sites; in many Amazon purchases, for instance, the company already collects sales tax because it expanded its fulfillment centers and offices so rapidly that it has a physical presence in most states. But Amazon does not currently collect sales tax for items bought through its third-party sellers, which are stores that use Amazon to sell goods, but that take care of fulfilling orders and providing customer service on their own. Third-party sellers make up about half of all goods sold on Amazon, the company has said. This may be why President Trump has focused some of his criticisms of Amazon on the sales-tax issue, tweeting in August that “Amazon is doing great damage to taxpaying retailers.” (Two states, Washington and Pennsylvania, do currently collect sales tax on behalf of third-party sellers.)
 
Half of Amazon sales are from third-party sellers?

Between Marketplace transactions, those described in UncleLar's post, and drop ship items (Sold by XYZ,Fulfilled by Amazon), yes.
 
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