One of the budget-related changes voted in last week by New York State’s politicians included a new “Amazon tax”:
“Another $50 million will come from requiring online retailers like Amazon that do not have a physical presence in New York to collect sales taxes on purchases made by New Yorkers and remit them to the state.
New York’s argument, based on a reading of the 1992 Quill vs. North Dakota U.S. Supreme Court ruling, is that because Amazon makes sales through affiliates who live in the state, it can be considered to have a physical presence there—which means the new law wouldn’t apply to retailers who don’t use affiliate programs.
Oddly, until now New York residents have been asked to voluntarily provide their total sum of online purchases on their state tax forms in order to estimate a tax payment, but InternetNews wrly notes it “evidently has fallen short” of the expected revenue goals set by the state.
Although there’s likely to be a legal challenge to the law, it’s also possible that other states will use it as a model to levy their own sales taxes whenever there’s an affiliate presence in-state. In the near future, at least, it looks like New Yorkers will soon have to start paying sales tax on Amazon purchases.
“Legislators Back Spending Rise in State’s Budget” [New York Times] (Thanks to Andres!)
“‘Amazon Tax’ Lands in New York” [InternetNews]
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“Amazon Doesn’t Love New York Tax Plan” [InternetNews]
(Cat: izarbeltza)
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I live in CA and in Alameda county the tax rate is 8.75%. Because of this I do tend to shop online (Amazon/eBay) for electronics items/books. When I did my taxes there was a “use tax” line to account for anything I bought mail order. I figure for the amount of sales taxes they’re already getting from me for my family’s other expenses (gas, clothing) is enough. I’m not paying.
makes sense….
Just read Pennoyer v. Neff, and everything will become clear regarding NY’s jurisdiction
@spinachdip: Ahem, Albany is NYC’s little lap dog. Just ask the rest of the state who gets the tax dollars and who gets forgotten. The rest of NY State would love to let NYC succeed. Economic opportunity might actually start again for the rest of the state.
@Major-General: If you paid OKC’s higher sales tax, then you may have been eligible for a credit IF you paid CA’s sales tax. Indeed, you may not have needed to pay it all, but I can’t be certain of that. You may have been legally required to pay it twice, too.
VAT is a seperate issue, though. Everything I found with my state indicated that they would not credit any Value Added Tax paid on a purchase when collecting a use tax on the item. I imagine most other places do the same.
All this confusion and bitterness over sales taxes is pretty illuminating when you remember that Republicans have a habit of suggesting the solution to all of our problems are MORE sales taxes. I feel a lot better paying income taxes than I do sales/use taxes. Consumption taxation is inherently regressive having the greatest impact on those who make the least, and thus spend the highest percentage of their income.
Hey Consumerist, it would be great if you could acquire the names of the “NY Politicians” who voted to approve of this “Amazon tax.” I for one want to know who NOT to vote for during the next election.
So when Spitzer had his little tryst in Washington, did he have to pay a “use tax” back to NY?
mikelotus – They can tax products they sell in their state no matter where they came from they can not tax things for crossing state lines or that were purchased in another state.
Basically what we discovered under the Articles of Confederation is that states should not begin trade wars with each other.
@compuwarescc: Similar experience, I was moving from VA to PA, and if you purchase a car out of state and move to PA within 6 months of purchase, you are required to pay the difference in sales tax if greater. In my case, I just waited an extra 3 mos to
register.
“Amazon cat is worried about an audit.”
So, one option for amazon would be to stop allowing New York affiliates.
@quail: “Just ask the rest of the state who gets the tax dollars and who gets forgotten.”
I’m comfortable with that question, as long as we can also ask who pays the most taxes and yet receives a smaller percentage of their tax dollars back from the state government in terms of spending! (Here’s a hint — it’s not Oswego County).
@magic8ball: You either pay the difference between the two states tax rates OR you pay your state’s tax rate and file for a refund from the other state. I had to do it a couple times in college when I bought big ticket items in IN (at 5%) that I took back to IL (at 7%).
(Boy, those were the days, stupid 9 3/4% central Illinois)
In theory if you buy at 7% and take it home to the 5% state, you should get that 2% refunded. I’ve never lived in a state with lower taxes than its neighbors, though, so I wouldn’t know.
It’s called “use” tax because it’s only interested in items you bring home to use. So, for example, if you go to college out of state but pay taxes back home, you don’t pay use tax on your textbooks because you use them where you bought them. Similarly, nobody cares about the “use tax” on that soda you drank on a road trip. (Well, food’s often exempt anyway.) But you get the idea. There’s usually a minimum number of days they want you using tangible personal goods outside the state for it not to count under use tax.
The specific rules are usually a little different for cars, boats, etc., but the idea is similar.
How else are the ny governers gonna pay for their woman?
That sucking noise is the sound of Amazon pulling out their affiliates. Provided this stands up in court, of course.
[www.bookweb.org]
Didn’t connect my comment to the URL I just posted (from the American Booksellers Assn), but this isn’t just Amazon folks–Target, Borders.
Why do people assume that online purchases should be sales-tax free? The argument is all about the burden of tax collection. Previous arguments were that it was too burdensome to comply with the various tax schemes of the different states/ localities. I think that a better standard than ON (all Internet retailers must collect & comply with local taxes) or OFF (individuals required to file use tax statements) would be a certain threshold such as $1 million in sales or somthing.
@BStu: The safe harbor deal in MA is not a voluntary payment. You must pay either the actual 5% use tax applicable to your non-exempt out of state purchases or you can pay the safe harbor amount as an estimate. Sure, you could claim no use tax (making it arguably “voluntary”), but if you had non-exempt OOS purcahses, you’d be committing tax fraud.
You must remember that sales and use taxes are local taxes that were enacted by the representatives that you elected to sit in your statehouse. This money provides the needed funding for your local puplic human services. Depending on whether or not the tax is state or locally adminisitered it is divided up and send back into your community to benefit you and your family. When you try to around the system and buy things online you are only taking money away from your own community. State and local sales taxes are a necessary evil along with county property taxes.
The alternative for local funding would be some sort of federal funding and we all know that’s probably not a very good idea. I encourage you to shop locally and support your own communities with your tax dollars. You may not agree with what your state or local government is doing with those dollars but that is when you must stand up for them and throw the bums out and run for state rep yourself and make those changes yourself.
The Internet tax issue is not about paying tax for retail items but for not taxing the access to the Internet itself. I know no one will read this considering I’m a bit late but this is the one topic I know best. I should teach a class on this topic matter it’s fascinating stuff. If you want to know more (or be bored) let me know. In the meantime pay your state and local taxes with pride know that you are making a difference where you live.
Now where’s that W-2…?
@nequam:
You would be committing fraud, but everyone in NY who doesn’t pay use tax is committing fraud as well.
@chiieddy: They sure do, and there’s no way I fill that portion out.
The only way they get you is if, say, you buy a car in NH where there’s no sales tax and immediately register it in MA.
I’ve lived in both MA and CA (currently CA) and always buy big ticket items from Amazon when I can. As someone else already said, at 8.75% on just about EVERYTHING (and some of the highest gas taxes in the country), I’ll keep the rest, thanks.
@plustax: When you try to around the system and buy things online you are only taking money away from your own community. – Good. My community takes my tax dollars and wastes them on stupid, pork projects. Then they have the audacity to whine about being broke and needing to raise taxes. You know what, we’re taxed enough. The American public is sick and tired of it, so when we’re presented with an opportunity to keep more of our own money instead of giving it to these wasteful bureaucrats, we take it. Screw them and screw their stupid use tax rules.
If they go back to using our money only for the bare necessities such as roads, water, sewer, etc, and eliminate all of the socialist spending and giveaways, they’d have plenty of money. I have a tight budget, I can’t just spend-spend-spend, I have to make hard choices on what I can afford and what I can’t. Government needs to do the same and the people are beginning to demand it. Soon, we won’t leave them with a choice in the matter.
arcticJKL at 10:23 AM – oh? Ever hear of “excise tax” in your state? Gas, tobacco, furniture… Buy it via the internet, and if your state finds out you may well be socked with these beauties. It’s why a couple years ago a number of internet tobacco suppliers either closed shop or no longer ship to some States – they could not handle having ALL their records subpoenaed by States on fishing expeditions.
Uh, there is no “voluntary” here, in the STates with sales taxes you are [usually] supposed to report purchase of taxable items on which you did not pay (your State) sales tax.
@jimconsumer: You can’t just demand they do something about it, you must go in and try to change the system from within. Whining about how state and local government spends our tax dollars is not nearly enough to get things done. It’s the grassroots efforts of community activists that will really make the difference in our tax laws. How did Prop 13 which helped property tax payers in California get passed through the state house, it was due to a revolt of grassroots organizations who stood up and took a stand and used their democratic rights as voters to get their message across. Many people disagree with Prop 13 but it shows that something can be done to make changes in our system. But until then, don’t shortchange your own community by cheating on your taxes.
@plustax: I actually am active politically, I always vote, I write letters on a regular basis and participate in government as best I can as a private citizen. That doesn’t change the fact that these people do whatever they darn well please. We throw them out and elect new people who proceed to do whatever they darn well please, too. They already take 30% out of my paycheck and I pay nearly 9% in sales tax on things bought locally, plus outrageous vehicle licensing fees (they charge sales tax on the full retail price of the vehicle no matter what you paid for it).
As far as I’m concerned, when I buy something from out of state and have it shipped to me, that’s mine, tax free. I don’t consider it to be cheating in any way, shape or form. What I consider to be cheating and, quite frankly, outright theft, is when they tell me, “We don’t care that you paid $500 for a non-running vehicle. Our computer says that vehicle is worth $6,000. You owe tax on that.” Then I pay over 100% tax and it’s happened to me multiple times. That, my friend, is cheating. Refusing to voluntarily hand over even more of my own money to these punks is not.
@plustax: Correct whining doesn’t change anything.
Removing socialist tax and spenders from office does.
The first thing we need to do is find out which politicians people like you support. Then remove them from office.
Thanx for the advice!
@Steaming Pile:
big deal, plenty of software out there to do this. amazon can implement this in a week. amazon is not likely to tie things up in court too bad, not good for business to be pissing off states. And Spend $25 at Amazon and shipping is free whiners. Also how do you think Barnes and Nobel is suppose to deal with having to charge the tax, which is supposedly so difficult to do, since they have a store presence in each state? Is this really fair to them? @arcticJKL: you are wrong. virginia tax officials have pulled over 1000′s of people (Virginia residents) buying booze in DC and bringing into VA and not paying the tax on it.
It will just be easier for Amazon.com to terminate any relationship they have with NY resellers. Then play the “Don’t blame us, blame your state gov’t” card. In which case NY state would be under the thumb of the Interstate commerce clause and not have a back door to make Amazon remit NY sales tax.
@kbarrett: We have members of the socialist party in the statehouse? I could be wrong but I’m sure the vast majority of people who represent us in state and local government would consider themselves as either a Democrat or Republican. Neither one of those parties would ever consider themselves Socialist so I am really confused on who you are referring to in your response. As far as who I support does it really matter considering we’re talking local politics here. I gather you are in some compound in Wyoming, Montana or perhaps Utah and you’re not going to make a difference in my local community.
Here’s the basic problem local cities face on a daily basis thanks to the Internet and your attitude. I live and work in a city of 40,000 that is surrounded by a city of 3 million people. Local tax revenue is vital for our survival in providing the basic essential human services that we all take for granted. Because people do not buy locally and pay local sales taxes cities like mine suffer greatly. Also we have several hotels in this city and they lose thousands of dollars because when you book through travel sites the tax revunue is typically not allocated properly to the appropriate municipality. I sincerly hope that you and your family does not live in a community that feels the exact same way as you do and if you do, good luck.
You people all knew that this free ride had to end sooner or later. Sales and use taxes have more or less been around since the 30s and the Internet for considerbly less time. Since the wheels of government turn at a snail’s pace (thank G-d) it has taken them awhile to catch up. New York has finally found the loop-hole to get around the loop-hole Quill did earlier. This will go to the supreme court and we’ll see what happens. If the courts hold to NY’s position it may trigger what we’ve been working on for the past 15 years in the Streamlined Sales Tax Project. Not a national sales tax but an agreement to make the process less taxing for multistate retailers.
More tax money for the government to flush down the tubes. I wouldn’t mind it so much if they’d eliminate other more onerous taxes by doing this, but its nothing more than another way of siphoning more money out of our pockets.
@plustax: “Essential services” must mean moving City Hall twice, putting in cobblestone sidewalks and streetlamps every 40′ along the main drag (you can drive without your headlights on at night it is so bright!) and opening up a Senior Center that’s the largest for a municipality in my county. More taxes just mean more pet projects to spend MY money on so they can buy votes through useless projects.
I don’t get all weepy when a government has to start trimming fat because of loss of tax revenues. I actually see this as a good thing.
I made the mistake of moving to a place that has a 10% sales tax. I think 7 of it is Alabama and the other 3% are the county/city. It makes me miss Virginia, even with the higher personal property taxes being a consumer was still cheaper there.