created 11 months ago | Tagged:
Amazon taxes are not new taxes. They merely address who is responsible for collecting tax that’s always been due on tangible personal property sales. Most states–45–have sales tax. If you buy online and have items shipped into one of those states you are liable for use tax, the mirror image of sales tax.
Since use tax is tough to collect, the battle is over getting online merchants to collect it. Soon we’ll all be paying it. See Internet Retail Tax Interactive Map. In California, Amazon’s compromise exempts online retailers from collecting California sales or use tax until September 15, 2012 if the feds do not pass a federal online tax measure in the meantime. See Amazon Tax: Good, Bad and Ugly. Other Amazon agreements include Texas, July 2012; Virginia, September 2013; Indiana, January 2014; Nevada, January 2014; Tennessee, January 2014; and South Carolina, January 2016. See The Era Of No Amazon Sales Taxes Is Nearly Over. Meanwhile, three federal bills are pending. The Main Street Fairness Act would impose national tax standards but allow states abiding by the Streamlined Sales and Use Tax Agreement to force Internet sellers to collect tax. Other bills include the Marketplace Fairness Act and the Marketplace Equity Act. You may ask: is this Constitutional? Probably. No state can constitutionally force an out-of-state merchant to collect or pay sales/use tax unless it has a “nexus” in the state. A 1992 Supreme Court case, Quill Corp. v. North Dakota, ruled that a business had to be physically present in a state to be required to collect tax. See Amazon Tax Attacks. That’s why if you buy online you must pay sales tax if the seller has a store in your state.
What’s Changed? The Internet for one. Plus, the Supreme Court in Quill said 45 state and 7,600 local tax systems were too complex for sellers to manage. Today, software does it in a jiffy. The Court invited Congress to pass a national law, since the constitutional prohibition is only on the states. Twenty years later, Congress has three bills before it and change is coming. Internet Tax? Want to vent about a real Internet tax? A proposed tax on Web sites and network providers serving non-U.S. users is to go before the International Telecommunication Union (ITU). See U.N. could tax U.S.-based Web sites. It was drafted by the European Telecommunications Network Operators Association, which represents companies in 35 nations that wants the ITU to mandate these fees. The Internet Society and others worry about developing countries being cut off from the Internet. If the new taxes are levied, big U.S. companies like Google, Facebook, Apple, and Netflix might reduce them by moving data closer to overseas customers, but that may not work for smaller U.S. companies. Deja Vu? In 1999, the U.N. Development Program considered e-mail taxes of one penny for each 100 e-mails. But it backed away from the idea quickly. Hopefully that will occur here too