Arizona Bows To Amazon, Ditches Plan To Collect Sales Tax

Like the nation as a whole, Arizona’s state government is sending Amazon mixed messages on sales tax. Just weeks after news broke that Arizona had sent Amazon a $53 million bill for sales tax it failed to collect between 2006 and 2010, the state senate has killed a bill that would have required the company to start adding sales tax to orders.

According to the AP, the bill would have encompassed all online retailers, but was believed to have targeted Amazon. That’s a major reason the bill was shot down, because opponents said legislation aimed directly at a company or individual violated the state constitution.

Those who supported the bill said it was meant to protect physical retailers who find it difficult to compete with Amazon’s prices. Amazon, which has tangled with many a government over the issue of collecting state sales tax, is no doubt breathing a sigh of relief because it won’t have to cut a special deal like the one it did with Indiana in January.

Arizona Senate rejects bill on Amazon sales tax duty [AP via ABC 15]


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  1. daveinva says:

    Hurray for common sense.

    Of course, I’m certain states will continue to insist on attempting to tax online purchases made out of state. Which means that if we MUST have those taxes, I’d rather have the federal government step in and tell the states that it has sole power to regulate interstate commerce, and thus only federal taxes can apply to the internet. And then they pass a law saying no federal taxes will be placed on the internet. Voila, problem solved!

    (Or, heck, fine, put federal sales taxes on the internet– and specify that those funds can only be used for deficit reduction. Even better!).

    • Herbz says:

      Or they could have a federal tax that they spread evenly throughout the states based on population….
      Or that it goes to schools or something.

      • Cat says:

        Or they could have a federal tax that they spread evenly throughout the states based on population….
        Or that it goes to schools or something.

        Lies! That will fix it! More LIES!

        • Difdi says:

          Putting more money into a problem only has a chance to fix it if the problem isn’t gross incompetence or rampant corruption. Unfortunately, when it comes to the educational system…

      • Kuri says:

        Money going to schools? Peh, and risk not having more disposable soldiers or gardeners?

    • dush says:

      federal sales tax on the internet?! Evil!!

  2. DrMcFacekick says:

    Virginia apparently just voted to start collecting Amazon sales tax next year. I’d be fine with it if the money would go towards useful things, like finally finishing the stupid Beltway construction that’s been going on for the last three decades.

    That being said, I’m *still* going to shop at Amazon.

    • frank64 says:

      I really think earmarked money is fungible. If it is important it should be budgeted anyway and paid for buy normal taxing. Most of the time, the fund is diverted and the great cause, such as “the children” don’t end up receiving the bulk of it. It is just a shell game. Or it allows the normal funds that would go to “the children” to be used in the normal, wasteful but not as politically favorable. We had this in MA with a cigarette tax. It was supposed to be used for cigarette health programs, but really is a way to get a small group to pay the taxes that should be paid for by everyone.

      • rmorin says:

        For the 8? or so months we had an alcohol sales tax it was the same thing. Even in Massachusetts were people are generally okay (or at least used to) taxes, the vote passed to recind it.

        I laughed when someone said “we are going to lose all the alcohol education and treatment programs it funded!” right before the vote. Yeah right. If we lose them, it will have nothing to do with whether the tax existed or not.

    • Alliance to Restore the Republic of the United States of America says:

      Lived in NOVA six years. Left and never going back because of the sky high taxes that don’t seem to improve a damn thing.

  3. Nigerian prince looking for business partner says:

    If the concern is about competitiveness of their own B&M stores, then do away with sales tax entirely and convert to a different system of taxation.

    I live on a state boarder and do just about all of my shopping for groceries, gas, and prescriptions across state lines to save on taxes. And in turn, people come here for liquor and cigarettes from out-of-state. My wife and I did exactly the same thing when we lived in Illinois, where we’d drive to Missouri, and when we lived in Philadelphia, where we’d go to Delaware.

  4. scoutermac says:

    If only Indiana would have done this. Simon Properties sued Indiana forcing the state to collect sales tax from Amazon.

  5. Blueskylaw says:

    The states are going to be like JP Morgan and Bunk of America – they will poke and prod and test market new “fees” (taxes) until eventually they stick with no regard to the final outcome due to myopia.

  6. Extended-Warranty says:

    This news makes me sad. We continue to throw away jobs and give an unfair playing field to B&M who are already providing jobs.

    There really should be no debate on this topic. The constitution wasn’t written with in mind. We should either collect taxes on both B&M and online, or niether. Because you feel the states don’t spend their money properly is not a strong case as to why online purchases should be exempt from collecting sales taxes.

    I’m sick and tired of this race to the bottom that everyone else is OK with. It’s time for someone to grow a pair and say everyone needs to play their part.

    • TuxthePenguin says:

      “We should either collect taxes on both B&M and online, or niether.”

      IIRC, every state that has a sales tax also has a use tax. They are the same thing and technically the consumer is responsible for paying the tax. Retailers collect it for convenience of all parties (and they get interest off the money they hold). Even if the retailer did not collect it, you are supposed to report that to the state and write them a check for the tax.

      No one does that with Amazon orders. Or anything else. Seems to me the states need to find a way to enforce that law – perhaps requiring Amazon to send the state a summary of some kind.

      • bee8boo8bop8 says:

        I do! But I’m an anomaly.

        The states aren’t going to enforce use tax because if they do, they’re going to make their constituents furious. Anyone with half a brain running against an incumbent will have political ads talking about how the (insert rival political party here) are trying to balance the budget on the backs of working families who cross the state border to save a few badly needed bucks on groceries or shoes for their kids.

        Blaming Amazon and other online retailers is a lot safer and makes local B+M stores happy.

        • Alliance to Restore the Republic of the United States of America says:

          So government is all about doing what’s easy vs. what’s right. Got it.

          Sadly, that is indeed a reality.

    • Excuse My Ambition Deficit Disorder says:

      If you would like to pay taxes on internet purchases…feel free to claim it on your taxes as out of state purchases.

    • George4478 says:

      So what method do you use to track your use tax each year? I assume that you pay it voluntarily year after year since you feel so strongly about it.

      • Extended-Warranty says:

        I’ll admit, the internet sales tax loophole is eniticing, and I take advantage of it. Call me a hyprocrite if you want, but of course I’m going to save on money as long as everyone else is. Most people who claim they always do the right thing are full of crap.

        My few dollars isn’t going to repair my local economy. What I do want is a rehaul of this policy so I, and everyone else don’t have this choice.

        • frank64 says:

          I guess I reluctantly agree with you. It isn’t fair to the retailers that they have to charge tax and the internet doesn’t. I also buy from Amazon, due in part to save on taxes. If we don’t like the taxes though, the best thing would be to vote to rescind then. The problem is in MA we have voted to reduce them in referendum, but the politicians overrode us. Seems fairness isn’t an option, no matter what though.

          • rmorin says:

            Its not the Internet! It’s the fact that you bought it from a different state and that is (pending a legal challenge) against the constitution because they don’t have a presense in your state. You live in Massachusetts. Should a store in New Hampshire (which has no sales tax) be FORCED by the state of Massachusets to collect sales tax and send it their way? Heck no.

            This is about interstate commerce, not “the internet”. The only real debate is what constitutes a presense in the state. Arizona has a warehouse and a software development center owned by Amazon. Is that a presense? Well their warehouse and software development center are not competing against local warehouses and software development centers, so I would say no. Feel free to disagree with that assertation, but again THIS HAS NOTHING TO DO WITH THE INTERNET.

            • frank64 says:

              A good argument. I do remembers MA going after a tire store in NH saying they should charge MA sales tax. I don’t remember the details, but MA lost that battle.

      • bee8boo8bop8 says: I buy yarn and I buy from Amazon. The other online retailers I used had in state presences so they already charged use tax. Yarn in CT was nontaxable when I lived there, so I used Mint to run a search for all Amazon purchases and totaled the amount. Then I would get from my credit card company of all points redeemed (I’d get amazon gift cards for them) and add the dollar value of the points to the amount. I’d add $500 for anything I missed, and then calculate the amount of use tax owed based on that amount. Not perfect, but close enough.

        In NY, Amazon charges tax and yarn is taxable and my spending has dropped, so I make mint tell me how much I spent on yarn, subtract the purhases from the local B+M shop, add $300 for heartbreak and pay tax on that amount.

    • rmorin says:

      The constitution wasn’t written with in mind.

      Really?? Should we allow states to enforce a dubious under the constitution tax on automobiles because it costs horse and buggy industry workers jobs?! People don’t shop on Amazon because there is a gun to their head, they do so because their prices are cheap (sales tax or not) and they have very consumer friendly policies. Heaven forbid a company give the American public what they want!

      As others have pointed out, you still have to pay use tax in most (maybe all?) states that have a sales tax, it’s just and individuals responsibility to pay it. Amazon is not getting away with anything. As with any dubious tax (remember the tax on cut bagels, but not whole ones in NY featured on this site?) it is alway done under the guise of “it’s just being fair!” but anyone knows with half a brain that it is about “we want more money”.

  7. dolemite says:

    “meant to protect physical retailers who find it difficult to compete with Amazon’s prices”. So…where are all the people touting “capitalism” and “free enterprise”? I assume everyone that supported the bill were democrats, since you know…Republicans are supposed to be totally against this type of thing (higher taxes and onerous regulations on companies). Oh wait: “”It’s really a jobs bill,” said Sen. Al Melvin, a Tucson Republican who sponsored it.”

    • Bsamm09 says:

      It isn’t really higher taxes. No one is raising taxes. They just want to collect the tax owed. I don’t think it should be on Amazon unless they have a presence in the state. What defines presence is up to the lawyers.

      Forcing amazon to collect sales tax would impose a large compliance costs on Amazon. Sales tax is a bitch. It is broken down in small areas and there are many rules that vary even on the product itself. Even the date that a product is purchased can change how it is taxed.

      • Yomiko says:

        Good point. Especially if you consider county and municipal/locality taxes. It’s not just 50 states with different rates (some of them 0), it’s all the regions within states that layer onto those state taxes that really make things complicated. Figuring out exactly which taxes apply to a given purchase based on the shipping addess would be unduly burdensome to the seller.

    • Excuse My Ambition Deficit Disorder says:

      It shows how our politicians haven’t the slightest on how the intertubes work. These people have the freedom to setup a store front on Amazon…just like everyone else. Tweaking how their business works might actually stop them from being stagnate and increase innovation in business. This is a free enterprise system people…you can’t sit on your buttocks and expect people to come to you….this entitlement mentality shall be the death of our country!

    • frank64 says:

      I think having Amazon collect taxes is well within Republican’s views. Taxes are a necessary evil, and it is best to do it as broadly as possible. This means not giving certain business’s or industries any favoritism. If retail is taxes, Amazon should be too. You can want reduced taxes and reduced spending and still acknowledge that we need to tax something. Nobody gets nuance anymore.

  8. Alliance to Restore the Republic of the United States of America says:

    How about government putting money where their mouth is and start “fairly” taxing rich people and corporations? Where’s all the effort to close the billions in loopholes that benefit the oil corporations and bullshit banks and asshole millionaires?

    If I were Amazon I’d be spinning that question around to get the support of average Americans.

    I’m really effin’ sick of hearing about government trying to find more ways to get more money out of the little guy. We’re broke. No more blood from turnips!

    • GuyGuidoEyesSteveDave‚Ñ¢ says:

      So the “asshole millionaires” who run Amazon should spin the question around as to why they aren’t being taxed more to get support for them?

    • George4478 says:

      >>We’re broke. No more blood from turnips!

      In a story about people spending too much money online and not paying sales tax.

    • frank64 says:

      We middle tax need to pay for or government too. Way to easy to deal with the hard questions on taxes and spending by always asking the rich to pay our way. They already pay a huge percentage of our government. They really don’t have enough money to take care of all the bills we want them to pay. Once we figure out that we need to pay at least some of our own way, we MAY be able to make better spending decisions.

      PS. I am all for doing away with loopholes. It is just that we may find that we get many of them too.

      • Herbz says:

        Dude, you do know why they already pay “a huge amount of our taxes”, right?


        Something like 10% of the people in this country hold 90% of the wealth.

        Thus, they should be paying 90% of the taxes as well (or more since they aren’t living in poverty and thus exempt from most taxes).

        • frank64 says:

          Wealth isn’t taxed Income is. If they make 90% of the income, then they should pay 90% of the taxes. We agree on that premise. Lets make that so, and then get on with our much more important decisions on spending and taxes.

    • dolemite says:

      Yeah, but if they proposed taxes on those people, they wouldn’t get perks and campaign contributions they need to be re-elected.

    • f5alcon says:

      what is a “fair” amount, the top 1% pay over 50% of federal taxes already. 47% of the population pays no taxes or gets free money from the government.

  9. Alliance to Restore the Republic of the United States of America says:

    Consent of the governed. Right.

  10. LarsimusBogartimus says:

    I’m pleased about this….now my “same day delivery” from Amazon here in Phoenix has been saved !! CHA-CHING FOR IMMEDIATE GRATIFICATION !!

  11. HomerSimpson says:

    Yet in many cases, even with the sales taxes added on, online retailers are cheaper than B&M. So they gonna find something else to whine about?

    “WAAAAAAAAAAAAAA! NO FAIR! How are we with the Smiley Face gonna sell HDMI cables for $50 when somebody online is selling them for $5?!?!?”

  12. Galium says:

    I believe Amazon should only collect taxes for the states it has a physical present in. Taxes are to provide monies for services that a state provides to it citizens and business. A B&M store receives these services from the state they are in. Amazon having no store in most states receives no services from those states. Amazon is being forced to collect taxes for services that is does not receive benefit from and that a large portion of the taxes is earmarked for, (fire dept., police, road repair, etc. etc.) If Amazon is forced to collect taxes it should be a far lower tax rate then the tax collected from B&M’s sales.

    • frank64 says:

      You have it wrong. The income taxes a company pays are for the services the state provides. The sales tax is a tax on the people who buy things for them to pay for the goods and services. The stores just collect it.

  13. Kuri says:

    The internet has spoken.

  14. shthar says:

    I would like to know if amazon was already charging people in AZ taxes?

    They started charging me several years ago, even tho my state hadn’t even dreamed at the time of such a thing.

    It does add a few bucks to each order tho.

    One of the reasons I stopped ordering things from amazon.

  15. gman863 says:

    In a related note, both the Governor and Sheriff Arpaio will be sending local law enforcement and ICE agents to the home of anyone receiving a package from Amazon who has a Hispanic last name.