Amazon Fights Back in California

Brent Miller

13 years ago

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Enfusia 13 years ago

Well, "stupid is as stupid does". They need to fight back. But I'm sure the state won't actually see any revenue from such decision. They will lose money in the long run. Any Amazon rep making any real money will just go get a Delaware or Nevada corp and bingo out of the state their Biz goes.

Patrick
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dracoboar

13 years ago

Originally Posted by Marvin Johnston

Being a very anti-stupidity type of person, this is welcome news. There is an old saying that stupidity should be painful, but I rather doubt this was intended to apply to those people affected by stupid.

From Skip McGraths blog, "Amazon.com will ask California voters to repeal a new law requiring websites that forward shoppers to it to collect sales tax, a spokeswoman for the state's attorney general said on Monday."

Amazon Fights Back in California | Online Seller's Resource

As soon as I find where to sign the petition referred to, I'm in!

Marvin

Keep fighting Amazon and godspeed

Hopefully the IM that lost their affiliate program will incorporate in another state and California will continue to run off business to other states.

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Kay King

13 years ago

The problem Amazon faces is most voters are not affiliate marketers. The tax is presented to them as "online sellers paying their share" and they know or care about little more than that.

kay

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TheKeys

13 years ago

Originally Posted by Kay King

The problem Amazon faces is most voters are not affiliate marketers. The tax is presented to them as "online sellers paying their share" and they know or care about little more than that.

kay

I agree with this 100%. Most people don't understand the complications of such actions.

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Marvin Johnston

13 years ago

Regardless of how anyone feels about the actions that Amazon took in firing their California affiliates, I am *really* happy to see Amazon stepping up to the plate and fighting this crazy daffynition of nexus. My only hope (and what I'll work for) is educating the average (I think) Californian who seems to view business as evil.

So go Amazon!

Marvin

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Marvin Johnston

13 years ago

Kay, if the average voter can be made to understand the loss in revenue to California due to legislative actions, it is possible they might revise their thoughts about the whole situation.

My thoughts are along the lines that a good PR and copywriting campaign educating the general public might do wonders for making California a great state again.

Instead of being at the bottom re tax rates, education, etc.

Marvin

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myob 13 years ago

The law has already been on the books for at least six years requiring California residents to pay state sales tax on all internet purchases. It is included for declaration when filing state income tax. Have you been paying sales tax on your internet purchases? Didn't think so.

The internet sales tax law is at such a widespread virtual non-compliance, legislatures are trying to make companies such as Amazon be their tax-collectors. And if Amazon were to give in, that would open them up for back-tax liability beginning since when the tax law took effect. That is the crux of the issue, and is in very active litigation in New York courts of which the outcome will be a precedent for all of the other nexus states.
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dvduval

13 years ago

Isn't it relatively easy to setup a company in Nevada?
Then business as usual for a California affiliate.

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caseycase 13 years ago

Originally Posted by dvduval

Isn't it relatively easy to setup a company in Nevada?
Then business as usual for a California affiliate.

I would assume that could work! Get a tax id # in a state like NV where this isn't going to happen anytime soon and run with it!

Glad to hear Amazon is fighting back as well.
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myob 13 years ago

Originally Posted by dvduval

Isn't it relatively easy to setup a company in Nevada?
Then business as usual for a California affiliate.

Or setup in a number of other non-nexus states; Delaware is the most common. It costs roughly about $1,200 or so to form an LLC, then an $800 annual registration to the California State Board of Equalization regardless of what state the company is incorporated.
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thomashoi

13 years ago

It's very unfortunate for affiliates in California... but i guess that's business.... situations changes and we as entrepreneurs got to work around this to keep our passive income alive!

In my country, tax rate is 0% for the first $100,000 for first 3 years..... It's no wonder why many entrepreneurs setup companies here.

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Brenden Clerget

13 years ago

I don't live in California, but I don't agree with it, nor do I agree with many of the taxes and things that deal with businesses. I think they punish people in a way that run their own businesses and make money and it's just another way for them to try to crawl back all that money they blow on crap we don't really need as tax payers.... my two cents.

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timpears

13 years ago

I have never understood why Amazon has laid down on all these challenges to this issue by the various states.

Somewhere in the Constitution there is a provision that restricts states from charging tariffs on trade between the states. I would think this prevents such taxes from being legal.

A 1992 US Supreme Court decision Quill Corp. v. North Dakota, 504 U.S. 298 (1992) should have put an end to this. The court held that a company must have a physical presense in the state in order for them to have to collect sales taxes. Affiliates are hardly physical presences. Affiliates are advertising agencies, and if that can be held as a reason for collecting taxes, then if a company has an ad on National TV, then that also would require the collection of taxes.

Totally absurd.

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Tim Pears

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Brenden Clerget

13 years ago

Originally Posted by timpears

I have never understood why Amazon has laid down on all these challenges to this issue by the various states.

Somewhere in the Constitution there is a provision that restricts states from charging tariffs on trade between the states. I would think this prevents such taxes from being legal.

A 1992 US Supreme Court decision Quill Corp. v. North Dakota, 504 U.S. 298 (1992) should have put an end to this. The court held that a company must have a physical presense in the state in order for them to have to collect sales taxes. Affiliates are hardly physical presences. Affiliates are advertising agencies, and if that can be held as a reason for collecting taxes, then if a company has an ad on National TV, then that also would require the collection of taxes.

Totally absurd.

That's probably one of the most sound arguments I've heard in a really long time against it, other than "it's just unfair"

Well played Tim, well played.

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myob

13 years ago

Originally Posted by timpears

I have never understood why Amazon has laid down on all these challenges to this issue by the various states.

Somewhere in the Constitution there is a provision that restricts states from charging tariffs on trade between the states. I would think this prevents such taxes from being legal.

A 1992 US Supreme Court decision Quill Corp. v. North Dakota, 504 U.S. 298 (1992) should have put an end to this. The court held that a company must have a physical presense in the state in order for them to have to collect sales taxes. Affiliates are hardly physical presences. Affiliates are advertising agencies, and if that can be held as a reason for collecting taxes, then if a company has an ad on National TV, then that also would require the collection of taxes.

Totally absurd.

Amazon is not laying down on this. That is precisely their argument as this required collection of sales taxes is unconstitutional and illegal. It is legally required now for each resident to pay their own sales tax on internet purchases, which of course no one does. It's not enforceable so individual states are trying to force companies like Amazon to be their sales tax collector. This issue is now being challenged in the New York courts, and has been for a few years now. The outcome will set a precedent for all the other "nexus" states. Of course, Amazon won't have any affiliates in those states, so this exercise is another waste of tax payers' money.

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thomashoi

13 years ago

They are getting desperate since it has got billions of debt..... they got to do all things to avoid getting bankrupt.

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timpears

13 years ago

Originally Posted by thomashoi

They are getting desperate since it has got billions of debt..... they got to do all things to avoid getting bankrupt.

I assume you are talking about California, not Amazon.

This law is going to reduce the income tax paid by affiliates as they are going to lose that income with the loss of their affiliate status. They will gain no additional revenue from the sales tax as there are no Amazon affiliates in California any more. So if they would have spent the time trying to figure out why they are running people and businesses out of California, that would have been more productive as far as raising tax receipts.

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Tim Pears

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Marvin Johnston

13 years ago

Originally Posted by timpears

So if they would have spent the time trying to figure out why they are running people and businesses out of California, that would have been more productive as far as raising tax receipts.

I first read about businesses leaving California about 1991 in Forbes Magazine. I suspect the people/legislators driving businesses out of California know exactly what they are doing. And conning people to support them.

The real question is why, and what is their real agenda?

Marvin

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timpears

13 years ago

Originally Posted by Marvin Johnston

I first read about businesses leaving California about 1991 in Forbes Magazine. I suspect the people/legislators driving businesses out of California know exactly what they are doing. And conning people to support them.

The real question is why, and what is their real agenda?

Marvin

For the life of me, I don't know. I lived in California for almost five years due to a company transfer. Not a bad place to live, but different.

I look at Texas and how well they are doing. Recent statistics showed that they generated almost half the jobs in the country, I think for last year. What are they doing that other states are not? I think even a blind person could see what it is. But do you think the other Governors and the President can figure it out? I guess not.

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Tim Pears

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rickfrazier1 13 years ago

In Hawaii, we had competing bills underway for awhile. One side of the fence wanted a nexus law that required the companies (like Amazon) to provide a list of customers, with name, address and amount of sale to the sate on a periodic basis. (somehow, they figured they'd collect their own taxes here somehow... I'd bet on a number of legal challenges to that one). The other side wanted a "simplified tax" that would be charged by any company shipping an item to a Hawaii address. This simplified tax would be a fixed rate for the whole state.

The nexus law would have make it difficult if not impossible for companies to do business (mail order, internet, or any other "remotely shipped" entity) because their accounting/sales systems just aren't set up for such an odd requirement, and the cost of making the changes would have them abandon the state...

The simplified tax law would at least be easy for the companies to implement, because their systems already handle such transactions. This would be a relative win-wiin because the companies could collect the tax, the state would realize some tax income, affiliates would still be able to "officially live" here, so they would retain their income, and the local brick and mortar places get their "pound of flesh" because they no longer would be at disadvantage to online sellers that don't have to collect tax.

(Let's never mind that most of the local businesses are so used to over-pricing their products that anything is used as an excuse to gouge. If something isn't in stock, the typical response is to charge at least 25% over the highest online price found, require at least 6 weeks before delivery (to put it on their next container coming in from the mainland) while charging us for FedEx 2nd day freight rate, and being generally obnoxious because they feel they are the "only" place we can buy a particular product from...) But I digress...

Completely in line with nearly everything else in government here, neither bill even got out of committee. Next year? Probably the same arguments, and hopefully the same result, unless they actually get the simplified tax plan in place.

Certainly, if they do ever pass a nexus law like the one that's been proposed here, I'd either sell out and move elsewhere, or incorporate in Nevada before the ink was dry. As it is, if doing business here gets any more expensive or obstructive, that's what is coming for me anyway.

Having spent nearly 20 years living and working in California, I feel a certain compassion for those living there and trying to make a living. There is a lot of beautiful country there, and I certainly miss some of it, but just can't see ever living there again as long as I need to generate an iincome locally. It just isn't worth it. I guess I'm getting too old fot some of this stuff.
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Dhira

13 years ago

I live in Cali and I got screwed.
Luckily the bulk of my income isn't from Amazon.... though the autopilot hurdreds coming in monthly WAS nice...

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PPC-Coach

13 years ago

You can still do amazon in any other country no matter what state you live in. This is a non-issue imho.

People who live in the US seem to think that the US market is the only one in the world.

The case is just the opposite.

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myob

13 years ago

Originally Posted by PPC-Coach

You can still do amazon in any other country no matter what state you live in. This is a non-issue imho.

People who live in the US seem to think that the US market is the only one in the world.

The case is just the opposite.

That is incorrect. If you live in any of the nexus states where the law has passed, you cannot be an Amazon affiliate, period, including for any other country in the world. The very application as an affiliate will be denied by Amazon. You either have to move or incorporate as an entity outside of the nexus states.

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PPC-Coach

13 years ago

You can still do amazon in any other country no matter what state you live in. This is a non-issue imho.

People who live in the US seem to think that the US market is the only one in the world.

The case is just the opposite.

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dracoboar

13 years ago

Originally Posted by PPC-Coach

You can still do amazon in any other country no matter what state you live in. This is a non-issue imho.

People who live in the US seem to think that the US market is the only one in the world.

The case is just the opposite.

A non issue to you maybe if you cant see past your own nose and empathize with others in your field then yes.

However if this continues to gain steam who knows it may come to a neighborhood near you some day.

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