Deal! California to Delay Amazon Tax

13 years ago

Thanks for the alert.

So, in CA, we have a year to get selling (headed toward San Diego soon)...

but, I hate to think what sort of a tax the FEDs will come with...could be doom and gloom for many an Internet Marketer.

We'll have to wait and see and make as much moolah as we can now.

Thanks for the Alert.

gjabiz

Originally Posted by kindsvater

Breaking news from the California capitol this morning, a deal has been struck to delay California's Internet / Amazon tax law.

Story here:

Capitol Alert: Amazon convinces California lawmakers to delay tax collection

In a nut, the law will be delayed and a request for a federal Internet sales tax law will be made. If a federal law is not passed then the California law will go into effect in a year.

.

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kindsvater

13 years ago

I believe the federal bill would be to streamline tax collection online. It would not impose a new tax, or require states without a sales tax to have one.

To date California has been a big holdout - wanting to keep it's higher sales taxes and large number of different tax rates depending on what jurisdiction one is in.

Getting California to simplify it's tax rates, perhaps even reduce them, could be huge.

.

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Kay King

13 years ago

I believe the federal bill would be to streamline tax collection online. It would not impose a new tax, or require states without a sales tax to have one.

A fed tax bill that "streamlines"....right up there with oceanfront property in Arizona, isn't it?

It's not up to the feds to oversee or administrate STATE tax codes - so the result will most likely be a new tax on top of state sales taxes...no matter how it's being presented now.

If I sound distrustful - it's because I am.

kay

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sethdrebitko

13 years ago

Originally Posted by Kay King

A fed tax bill that "streamlines"....right up there with oceanfront property in Arizona, isn't it?

It's not up to the feds to oversee or administrate STATE tax codes - so the result will most likely be a new tax on top of state sales taxes...no matter how it's being presented now.

If I sound distrustful - it's because I am.

kay

Actually any law that affects potentially multiple jurisdictions would be the Feds right to put there fingers in. States can fend off the fed only if they play in their own sandbox.

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Steve Wells

13 years ago

Originally Posted by Kay King

A fed tax bill that "streamlines"....right up there with oceanfront property in Arizona, isn't it?

It's not up to the feds to oversee or administrate STATE tax codes - so the result will most likely be a new tax on top of state sales taxes...no matter how it's being presented now.

If I sound distrustful - it's because I am.

kay

Wouldn't taxing the internet be double taxing? At least if you are already paying federal taxes on your business sales.

I don't see how they can do that without double dipping, which is against the constitution, I believe?

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Michael Oksa

13 years ago

Originally Posted by kindsvater

I believe the federal bill would be to streamline tax collection online. It would not impose a new tax, or require states without a sales tax to have one.

To date California has been a big holdout - wanting to keep it's higher sales taxes and large number of different tax rates depending on what jurisdiction one is in.

Getting California to simplify it's tax rates, perhaps even reduce them, could be huge.

.

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ROFLMBOTFTPBIRMMD

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Mary Wilhite

13 years ago

That's good news! A breath of fresh air for Amazon affiliates in Cali even if it's just for a year.

At least they'll have time to prepare their next step for what's coming.

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Rashell

13 years ago

Amazon and major brick-and-mortar retailers like Wal-Mart and Barnes & Noble agreed to lobby Washington

I realize this is somewhat good news for Californians but somehow this alliance

Amazon
Wal-Mart
Barnes & Noble
Washington

doesn't make me think warm happy thoughts.

Rashell

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valmillercorl

13 years ago

I wish they would do the same in North Carolina.

However, Amazon could suck it up and allow us to be affiliates in states where the Internet is taxed.

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kindsvater 13 years ago

Presumably, the deal with California will pave the way for other states such as North Carolina.

.
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tpw

13 years ago

Originally Posted by valmillercorl

I wish they would do the same in North Carolina.

However, Amazon could suck it up and allow us to be affiliates in states where the Internet is taxed.

It has nothing to do with current and future taxes.

NC wants back taxes going back several years, in addition to the tax rates to be processed based on where the affiliate lives, not where the buyer or seller operate.

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myob

13 years ago

California has had an internet sales tax for several years. California residents are expected to include this tax payment for all internet purchases when filing their state income tax form. This was never intended to be a voluntary contribution, but compliance has been almost non-existent.

The reason Amazon has been fighting against it is because this will open up the possibility of being retroactively liable for all unpaid retail sales taxes in not just in California, but all the other nexxus states as well. It's not Amazon's responsibility to be the tax enforcer nor for having to ante up for years of sales tax evasion by consumers. That's the crux of the issue.

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Ryan David

13 years ago

Originally Posted by myob

The reason Amazon has been fighting against it is because this will open up the possibility of being retroactively liable for all unpaid retail sales taxes in not just in California, but all the other nexxus states as well. It's not Amazon's responsibility to be the tax enforcer nor for having to ante up for years of sales tax evasion by consumers. That's the crux of the issue.

I don't think that's the reason at all. Amazon had no duty to collect sales tax, it was the resident's responsibility to report/pay it. Why would amazon be responsible for a citizen not paying their taxes?

The only reason they received a retroactive bill from Texas was because they had a distribution center located there, which they claimed was owned by another related company. Texas claimed they SHOULD'VE been collecting sales tax the entire time.

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myob

13 years ago

That is the reason that Amazon has been taking these actions. What is at stake is a debilitating retroactive tax liability. Amazon is in an active nexxus lawsuit right now against the state of New York. They are collecting sales tax and holding it in escrow (as required by the court) pending the outcome of the lawsuit. If Amazon loses the New York case, this will set a precedent for other nexxus states to collect sales tax retroactively.

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Ryan David

13 years ago

Originally Posted by myob

That is the reason that Amazon has been taking these actions. What is at stake is a debilitating retroactive tax liability. Amazon is in an active nexxus lawsuit right now against the state of New York. They are collecting sales tax and holding it in escrow (as required by the court) pending the outcome of the lawsuit. If Amazon loses the New York case, this will set a precedent for other nexxus states to collect sales tax retroactively.

Retroactively to when the law was enacted, not prior to that. That's what you would expect if you're going to fight a law.

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myob 13 years ago

Originally Posted by Ryan David

Retroactively to when the law was enacted, not prior to that. That's what you would expect if you're going to fight a law.

Not true here. The pending court case in New York is open ended. That means the potential liability precedent could be retroactive back to the first sales in every nexus state. For example in California it could stretch back into 1997 or whenever Amazon began selling in California, unless the limit is specified. It is a very fierce battle in the courts on many very murky points. The legal definition of "nexus" itself is the biggie, with much at stake.

Since 1955, California has a "use" tax, which was first required by mail order purchases and now for all internet purchases by state residents. Amazon is not just fighting the unconstitionality of having to collect sales taxes in the first place where there is no physical presence, but also the open-ended back tax liability. But, if the law is passed in any form, the very easy solution for Amazon would be to drop all of its US affiliates permanently.
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onSubie

13 years ago

Originally Posted by Ryan David

I don't think that's the reason at all. Amazon had no duty to collect sales tax, it was the resident's responsibility to report/pay it. Why would amazon be responsible for a citizen not paying their taxes?

This is sales tax, not income tax.

Amazon has an affiliate relationship with the participating residents of the state. The affiliates do not make the sales, they just drive the traffic to Amazon.

Amazon makes the sales and pays their affiliates a commission that varies based on a number of factors. Affiliates are paid in commissions at the end of a certain period (monthly) for all sales attributed to their traffic (affiliate link) for that period.

The states want to add a state tax to any sales Amazon makes that are generated by an Affiliate link from a resident of that state.

Amazon would have to collect the taxes at point-of-sale for any sales from that state's affiliate traffic. Amazon would then have to send that tax to the state. Amazon would then pay affiliates based on pre-tax sales.

If every state had an Amazon sales tax, Amazon would have to comply with 50 different tax laws and collect 50 different taxes and reimburse 50 different states.

Much easier to simply drop any state that threatens to tax Amazon sales.

Mahlon

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myob 13 years ago

@Mahlon,

Some states, including California already have an internet sales tax on the books, and had for several years. When "nexus" residents such as in California make an internet purchase, they are technically (read legally) required to forward the sales tax along with their state income tax filing. The fact is, low compliance is the reason why legislatures are taking this unconstitutional action of requiring companies with this nebulously-defined "nexus presence" in the name of affiliates the responsibility of collecting these taxes. Amazon has dropped affiliates in states where this law has passed, and demonstrated that they will continue to do so.
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Ryan David

13 years ago

Geez. Amazon rescues California affiliates for a year, but then vows to screw over virtually everyone else, consumers and businesses, by lobbying for a national sales tax?

Should we be happy or sad?

Either way, in this environment, I don't see how a national sales tax would happen. People like getting cheap stuff tax free more than they like to help out "brick and mortar" businesses...and I'm sure that's how this will be sold.

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krtinberg

13 years ago

This is big news.. I'm anxious to see how it all plays out!

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Kay King 13 years ago

At least they'll have time to prepare their next step for what's coming.

I was listening to a financial news station and that's how it was presented there. No mention of fed tax at all in that announcement - more a focus on a "delay" in implementation to benefit both california and amazon.

If nothing else (and honestly, I hope there's nothing else) it provides time for people to consider their options before the tax takes effect.
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JamesGw

13 years ago

I don't think the issue is so much having to pay tax, but how annoying it is to do the paperwork for all of the different areas. It's crazy.

As for the fed thing, I think, as someone else said, it's just to help simplify the collection process.

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Ryan David

13 years ago

Originally Posted by JamesGw

I don't think the issue is so much having to pay tax, but how annoying it is to do the paperwork for all of the different areas. It's crazy.

As for the fed thing, I think, as someone else said, it's just to help simplify the collection process.

Really? You think people don't mind paying tax? That's interesting.

The federal gov't getting involved to "help simplify the collection process".

Gee....what could go wrong?

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OrangeBull

13 years ago

I'll take kindsvater's word on California's sales tax being complicated, and add to that the fact that New York's is no picnic either for a New York based mail order company. 63 counties all with their own sales tax and there are certain cities that have their own rate as well, and you are supposed to account for the various rates across the board based on the location of the customer within the state, that's just for in state sales. Now extrapolate that out across the country and it becomes crazy.

One across the board sales tax for ALL mail order/online sales, say 9% to borrow a number from Herman Cain, not that I appreciate his ideas, but since a Republican proposed it, I'm hoping it would be a tax that the Republican Party as a whole wouldn't poo-poo! Of course it's a tax primarily on poor and working people so they should be all for that one.

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The Niche Man

13 years ago

Finally some good news for California Associates, even if its for a year.

That gives us another year to add extra padding to our rear ends before they try and stick it to us again next year.

"California Dreaming" is turning into ... California 'Schemin'

Multiple streams of income to the rescue again.

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sdradius

13 years ago

Has anyone heard any updates if this actually passed or not?

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fluffythewondercat

13 years ago

I'll believe it when I get a reinstatement notification from Amazon. Until then, nothing's changed.

fLufF
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stephfoster

13 years ago

Originally Posted by fluffythewondercat

I'll believe it when I get a reinstatement notification from Amazon. Until then, nothing's changed.

fLufF
--

Same here. Not a peep about reinstatement yet, and until I know how things will go next year, I'd be antsy about promoting Amazon more anyhow.

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newimguy

13 years ago

Originally Posted by stephfoster

Same here. Not a peep about reinstatement yet, and until I know how things will go next year, I'd be antsy about promoting Amazon more anyhow.

Amazon said themselves they are opening up the affiliate program in california again. It's actually part of the compromise. Here's what they said

In an e-mailed statement, Amazon Vice-President for Global Public Policy Paul Misener said: “This bipartisan, win-win legislation will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates." The company had no further comment.

Read the story here

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stephfoster

13 years ago

Originally Posted by newimguy

Amazon said themselves they are opening up the affiliate program in california again. It's actually part of the compromise. Here's what they said

In an e-mailed statement, Amazon Vice-President for Global Public Policy Paul Misener said: "This bipartisan, win-win legislation will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates." The company had no further comment.

Read the story here

It would be nice, but I'd want that promise to include continuing the affiliate program next year when they're responsible for the taxes. I want to know that I have a good chance of my affiliate links and sites for them working long term. I'd love to assume that it would be a part of the agreement, but I'm not ready to do that yet.

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Rick Wilson

13 years ago

Amazon hasn't said whether or not it will reinstate its California affiliates in light of this agreement.

Rick Wilson aka CorpRebel

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onSubie

13 years ago

Originally Posted by kindsvater

In a nut, the law will be delayed and a request for a federal Internet sales tax law will be made. If a federal law is not passed then the California law will go into effect in a year.

I think a federal Internet tax would be a difficult thing to push through. The law would not extend to non-Americans and suddenly the USA is hampering its own businesses with a tax that other (more socialist) nations are not imposing.

There will be a lot of pressure on US lawmakers to NOT tax US companies on the Internet when other nations are not.

Now, to coordinate an internationally agreed Internet tax in a year? Good luck.

Mahlon

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onSubie

13 years ago

@myob:

We have a similar thing in Canada, I think. The tax is applied based on the location of the purchaser in relation to the company. Tax only applies when BOTH are in the same province (state).

So a company based in Ontario has to charge sales tax to residents or Ontario, but not to residents of other provinces. Companies based in those other provinces do not collect tax from sales made to Ontario residents, but they may for residents of their own province.

As you said, there is low compliance except from established companies that do it as a matter of course.

As for the "nexus" presence, some states are defining the presence of a distribution centre as Amazon doing business in the state. Amazon recently cancelled a planned expansion into one state and moved it to another state (Texas I think?) when the first state started to prepare to tax Amazon once they were doing business in the state with the new distribution centre.

Isn't tax law interesting?

Mahlon

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focused

13 years ago

Amazon claims that it technically doesn't own the distribution center
in TX, rather a subsidiary owns it.

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Tmill

13 years ago

Does this mean the affiliate program is open again to california residents? Also, is it bound to get shut down again or are we safe to start promoting again? I dont want to open a bunch of new sites only to get them cut off again

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sherrieb

13 years ago

It passed Amazon Deal To Collect California Sales Tax Passes - Forbes and Brown is not expected to veto it.

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Deal! California to Delay Amazon Tax

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