I have mixed feelings about this. The arguments for this include states’ loss of tax dollars and the impact of online sales on local brick and mortar businesses.
I understand that states are missing out on a lot of revenue and this could help them. I’m not so sure that this will make much of a difference for struggling brick and mortar stores.
Do people really shop online to avoid sales taxes? I’m skeptical. I think people choose to shop online mostly due to convenience, so having to pay taxes online won’t impact that decision much.
Also, many brick and mortar businesses have added online sales and will now face the prospect of possibly having to deal with every sales tax jurisdiction in the country, or refusing sales to customers in low volume states.
Large online businesses like Amazon are the biggest threat to brick and mortar and this will add to their advantage if anything. Amazon already has the infrastructure for sales tax collection so this ruling increases their advantage over both smaller internet retailers and brick and mortar stores that have an Internet presence.
Makes sense. I assume that Amazon has so many distribution centers around the country that a substantial percentage of their customers are already paying sales tax. Other online retailers are going to be hit harder.
Amazon could actually come out of this a winner in some cases. For example, right now it makes more sense for me to buy a computer component from Newegg instead of Amazon since Newegg doesn’t charge an extra 7% tax. If they do, then I’m more likely to pick Amazon due to Prime shipping or easier returns, etc.
When I shop on line, I don’t give any thought to sales tax. I might reconsider if there was a surcharge on all on-line purchases beyond sales tax but even that would have to be awfully high to run more than the cost of gas, my time, and the annoyances of shopping. I hate shopping.
I don’t think twice about sales tax (as a discrete thing) when shopping online. When I consider price as a shopping criterion, it’s the bottom line, shipping and taxes and all. And price isn’t usually the primary discriminator: my judgement of the quality of the item, the manufacturer, and the vendor are much more important.
If I really want to shop free of sales taxes, I’ll drive across town to our local U. S. Air Force Base and browse the Exchange. (Ah, the benefits of putting up with 21 years of being underpaid, overworked, and harrassed by the USAF.)
A huge percentage of my purchases are made through Amazon. I never think about the tax implications.
Sales tax does have some influence on where I make purchases, however. Pennsylvania has a 6% sales tax. I’m cool with that. However, some areas have a sales tax in addition to the state’s tax.
I used to shop for cars in Allegheny County. One percent of a $20,000 sale is enough to convince me to shop elsewhere. Allegheny County also has a tax on drinks containing alcohol. I drink in counties that do not single me out for fleecing.
No cite, but I read somewhere that Amazon was actually in favor of this since it might open a new line of business for them. There are thousands of tax rates & varying combinations of what is/not taxed & Amazon, by their nature of selling so many things & having physical distribution centers in so many states already has a good database of this. The concept is that they could sell their sales tax rate collection (& remittance) service & make even more money from the Etsy/e-bay etailers who don’t currently do this for more than one state.
In my state, necessities aren’t taxed, mainly food & clothes. However, a tuxedo is considered luxury goods & not clothing & is therefore taxed. A few years ago I bought a new winter jacket. There was a little metal loop on the sleeve, this made it a ski jacket as it’s purpose was to attach lift tickets to it. Therefore, this was athletic apparel which is also taxed. Good luck with some mom-&-pop business knowing all of these differences for 50 states & unknown number of municipalities. They now need to build (& maintain) or buy software to do this or hire some service to handle it for them. This may cut into their margins enough to not make it worthwhile to continue in business.
When buying something expensive there is real savings by purchasing online from an out-of-state etailer. (Of course I’m supposed to remit those funds when I pay my state taxes. :rolleyes:). Why would I not go to a local retailer & buy it & get it in my hot little hands right now if the price is the same?
Sure, but if you’re shopping for an ACME Model 2077 Potato Peeler then price becomes a primary consideration for a lot of people (and then maybe vendor reputation, shipping speed, etc) since it’s an identical product whether you’re buying it from Amazon, Target, Rakuten or whoever.
I think this ruling can be to Amazon’s advantage since they already have a lot of vendor advantages and will be on a more equal field in regards to tax versus other online merchants. Might not matter much for a $7 purchase but I’d sure notice it on a $600 graphics card purchase.
Amazon has definitely been for this because this gives them an advantage over smaller businesses. I’ve been thinking about maybe selling on Amazon. Hopefully they’ll start handling the tax collections for independent sellers.
This still leaves the issue of having to have a sales tax license for every jurisdiction in the country that requires one. This could mean that a small seller has to deal with hundreds or thousands of individual licenses. Hopefully there’s some way a third party, such as Amazon or eBay, can be the license holder as well as the collector.
The South Dakota law, which was the state involved in the Supreme Court case, only applies to businesses with more than $100,000 in sales in a state. That provision doesn’t apply in many other states; therefore, any sales require tax collection & remittance.
Huh. I’m surprised more people here don’t take sales tax into consideration. I know plenty of folks who have made purchases online instead of a brick and mortar solely to avoid sales tax. On pricy items, that can be hundreds of dollars in savings. Sales tax here in Chicago is 10.25%. Buying online is a serious consideration. (Though you are supposed to report it and pay use tax on it.)
I"m not surprised Amazon supports this. This also eliminates an attention seeking lawsuit from a state attorney general looking to take a next step by suing big bad tech and sticking up for the so-called little guy.
Without having read the details, I would think this is going to be a big hit on small online retailers. As others have mentioned, Amazon (and maybe PayPal) stands to benefit if they set themselves up as a state sales tax processor for these types of small shops. As a processor they would likely be a “rent seeker”, carving off a fee for each dollar processed. Anyway, not a good development for Jim & Jim’s Custom Auto Decals out of Jim Jr’s basement in Au Claire, Wisconsin, or his wife Jen’s online Yarn Barn store.
It’s actually not going to affect anyone in New York State. NY slaps on an Internet sales tax based on your income. You can file using the actual untaxed amount you bought, but that requires you keep all receipts and be able to document it. The amount is so small that’s it’s usually not worth the effort.
I don’t know how the state confirms that, or discovers you left purchases out.
Amazon has a warehouse in NJ (several I think) so I have been paying Sales tax for them for years. I hardly notice it and only on big ticket items. The tax holiday was always meant to be temporary to encourage people to buy online. Obviously people no longer need encouragement to do that so I am fine with this.
I’m still not convinced that Quill was right as it related to due process. If I make widgets by special order and a guy from Idaho emails me wanting one, then how does me sending him that one package allow the State of Idaho to impress me into service as its tax collector? I don’t live there and have never been there. That one simple act should not be the minimum contacts necessary for them to assert jurisdiction over me. They can collect the tax from their resident.