Amazon Cuts Out Colorado
Government… looking out for you.
Kristie McNealy blogs from her suburban Denver home about raising four children and health issues. Her husband, Rob, a floor installer, runs another Web site offering product reviews and advice on hardwood floors.
It’s not just for fun. Whenever someone clicks on a link to buy a book or product that their sites mention from an online seller, the McNealys get a commission. And if that customer comes back the next day to that same retailer and buys a television, they get a cut of that, too.
Last week, the McNealys, along with at least 4,000 others like them, lost a chunk of their business when Amazon.com announced it was cutting ties with its Colorado-based affiliate marketers — Web sites and bloggers that help it sell products.
In severing those ties, Amazon blamed a new state law requiring it to collect up to an estimated $4.6 million in online sales taxes a year, which will help the state close a $1.3 billion budget shortfall.
Kristie McNealy said the move will mean a loss of roughly $300 a month, money that has helped make up for a drop in her husband’s income during the recession and enabled her to stay home and homeschool her children. She worries other companies may follow Amazon’s lead.
“Losing the Amazon account has been a financial blow, but losing the rest of our accounts will change the way my husband and I do business and provide for our family,” McNealy said.
While I think it is somewhat of a pain for companies to be expected to pay every local sales tax, they need to start collecting state sales taxes. They sell here, they have no excuse not to collect and remit the tax.
Congress needs to mandate this if on-line companies refuse to play nice.
Posted by .(JavaScript must be enabled to view this email address) on March 14, 2010 at 2006 hrs
So one person’s story of hardship means that its wrong for a state to require sales tax for online purchases?
Posted by .(JavaScript must be enabled to view this email address) on March 14, 2010 at 2052 hrs
George and Free Lunch… In states like Wisconsin it is the purchasers responsibility to report and pay taxes on goods purchased out of state, why should businesses be burdened with the additional responsibility of collecting and paying taxes to a state in which they do not reside?
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 0625 hrs
djmamayek -
Businesses get burdened because taxpayers don’t file their use taxes. Businesses keep better documentation. Do you really want the state to spend money auditing the on-line purchases of taxpayers to make certain they have paid the use tax?
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 0725 hrs
I’d rather that the government only levy taxes that it can enforce instead of transferring the costs of enforcement to other entities.
Posted by Owen on March 15, 2010 at 0745 hrs
Collecting sales tax is cheap for companies and they are paid a reasonable amount for collecting these taxes.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 0759 hrs
Amazon puts the local bookstore out of business by not collecting and remitting the Colorado sales tax. The local bookstore pays property tax, state income tax, and employs local people who also pay property and income taxes.
Consider this. I can wander down Main Street to the furniture store, pick out what I like, then go home and order sales tax free online. Is this fair to anyone?
This problem will be solved shortly whenn the Streamlined Sales Tax Project is fully implemented.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 0802 hrs
Actually, with regards to the “ease” with which a business specifically like Amazon, can “do state sales taxes”.
Are you sure you have any clue as to what the heck you’re talking about?
For example. The simplest case has amazon recording hundreds of thousands, or millions of transactions within the united states. Each transaction can belong to one state, which, in the easiest version of all this, has one sales tax rate across the entire state. That means that, *without* any errors, amazon will need to perform, and reconcile all those differing sales tax transactions… and that’s in an “ideal” world.
The real world has differing sales tax rates by *county*, or sometimes *city*, in each state. Good luck keeping track of that if you’re an international business. It’s easier, and more cost effective to not allow revenue partners in those states (Colorado) than to start down a slippery slope. My guess is that Amazon is hoping to *prevent* a slippery slope by causing some economic pain for Colorado. With the current crop of marxists (‘it’s not your momey, it’s the governments!”) in power all over, good luck to Amazon.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1101 hrs
I’d rather that the government only levy taxes that it can enforce instead of transferring the costs of enforcement to other entities.
Explain how that is the case here?
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1107 hrs
GMan,
I have no problem telling states that they have to pick a single rate for their state if they want internet or other mail order companies to collect sales tax for them. Still, it’s no problem for Amazon or anyone else to do an automated database lookup for tax along with the lookup they do for address verification. I’ve dealt enough with sales taxes as a retailer to know that they are easy to file and easy to automate.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1126 hrs
Disgusting. Amazon and these citizens should be tased and beaten for their insolence. Government knows what’s best and it needs money to do so. Bow to your tax masters slaves!
Seriously, why are so many so-called conservatives arguing over the merits of collecting taxes. Shouldn’t they be against any new tax, or should we just tax to the max somewhere else? Heaven forbid government didn’t grow and offer all these wonderful services.
Oh and if you think this is ridiculous, check this out:
http://www.sacbee.com/2010/03/13/2604016/irs-suits-pay-visit-to-car-wash.html
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1128 hrs
Shouldn’t they be against any new tax.
It’s not a new tax. It’s tax fairness. The Colorado law does not require Amazon to pay sales tax, but they will have an option to do so. What it does require is that Amazon or others remind their customers that the customers owe the use tax and, apparently, provide documentation of sales to the state so it can collect the use tax if Amazon is unwilling to collect the tax. Why should out-of-state sellers be given an advantage?
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1305 hrs
Why should out-of-state sellers be given an advantage?
Why isn’t the size and cost of government reduced so no one has to worry about who gets what? I know I know, that’s impossible. Only government can do some of these things and we are required to pay our fair share in order to provide these things. Plus here’s some vague reference to society that proves my point.
See the cracks in the foundation yet? The greedy tax hungry politicians are looking for new sources of “revenue” and now, thanks to the internet, some businesses are able to tell these slimes no.
And yes, it is a new tax. When you tax something that previously wasn’t taxed, then it’s a new tax. You can go through the mental gymnastics all you want, but the greedy tax feeding politicians aren’t happy unless they get a cut of every transaction. What a great system, I can’t wait to vote and get involved!
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1333 hrs
When you tax something that previously wasn’t taxed, then it’s a new tax.
It always was taxed. It just so happens that use tax compliance is very poor. This is a new enforcement mechanism. It is about stopping tax evasion.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1404 hrs
In severing those ties, Amazon blamed a new state law requiring it to collect up to an estimated $4.6 million in online sales taxes a year
If you have to pass a new law, then it’s a new tax. It’s a new tax on internet retailers that previously didn’t exist.
Good grief we’re arguing over semantics.
Government is dumb. There I feel better.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1607 hrs
djmamayek -
Businesses get burdened because taxpayers don’t file their use taxes. Businesses keep better documentation. Do you really want the state to spend money auditing the on-line purchases of taxpayers to make certain they have paid the use tax?
For my business I spend about one hour every month working on my sales tax, if I have use tax to pay it takes longer as I have to ferret out receipts and total them. When I begin selling products online, you are telling me that I would have to hire a CPA to do my sales taxes for me every month, because there is no way in my business, with four employees (and myself) that I could seek out several (in Wisconsin) or hundreds of different tax rates (nationwide).... I may as well just not bother with trying to tap that revenue stream. Our tax system is “voluntary”, which means that it is up to the individual to pay the taxes they owe to their state and federal government, not out of state businesses.
Collecting sales tax is cheap for companies and they are paid a reasonable amount for collecting these taxes.
Actually it is quite expensive to collect…. It forces higher fees to be paid to merchant services companies, it costs man hours to calculate and send in, there is a cost associated with every check my business has to write, not to mention the additional costs build into POS computer systems for the additional code written for the calculations… Furthermore, the early payment discount in Wisconsin is $10.00….. On a tax payment of $2500.00 or more….. reasonable amount?...... huh?
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 1628 hrs
Moral of the story: don’t use an affiliate marketing service where the terms are not under your control for your financial stability.
Posted by .(JavaScript must be enabled to view this email address) on March 15, 2010 at 2236 hrs
Moral of the story: don’t use an affiliate marketing service where the terms are not under your control for your financial stability.
No… Moral of the story: Know what taxes you owe, and how to pay them. Don’t blame businesses for the responsibility of individual taxpayers.
Posted by .(JavaScript must be enabled to view this email address) on March 16, 2010 at 0619 hrs
Moral of the story: If you’re government, don’t be so dumb as to think individuals are going to willingly keep track of their untaxed purchases and voluntarily remit that money to you, especially when everyone knows that for most individuals the amount is so negligible that it would never be worth auditing a return over it. Just make businesses collect the taxes in the first place since they already have mechanisms in place to collect and you have regulatory authority over them in a way that you can’t have in a meaningful capacity over individuals.
RO nailed it at #7. This is really an issue of fairness to mom-and-pop and bricks-and-mortar retailers who get screwed by people who do just what he described. They go to their local retailers, window shop for a television or a new fishing rod or whatever, and then have it shipped from an Amazon warehouse somewhere in Tennessee and pocket the “savings”.
The bigger issue here is for states to continue working together, perhaps with the help of the federal government, to homogenize their sales tax statutes and make cross-border compliance easier. Anything short of uniformity from state governments becomes a nightmare for online retailers. It’s a terrible burden to expect a retailer to keep track of the fact that 18 states tax all widgets, 14 states tax widgets at a reduced rate, 9 states tax only red widgets, 3 states tax only blue widgets, 2 states have sales tax holidays for widgets in August, and 4 states don’t tax widgets at all - then do that for every item they sell.
Posted by Recess Supervisor on March 16, 2010 at 1153 hrs
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