<p>I think the problem is that these companies are becoming more than just Internet companies. Many have decided it is important for them to establish a presence in several States or have agents, representatives or some form of contractor located every where. The pure Internet company is not going to chargr sales tax. I believe it was the CEO from Overstocked thatsaid they will maintain their operation out of Utah and not collect.</p>
<p>NewHope- all States have a sales tax refund team. Customers can send their documetation in and get a refund. If it is not received within 6 months from the date it was received interest has to be paid. Most customers are wrong by the way and do not get refunds.</p>
<p>^ tom - No argument about that. IMHO people are missing the magnitude of this new approach to tax collection. With regard to banking … credit card terms specifically … the Supreme Court ruled that residents of one state could be bound by regulatory terms of another state, even if the customer never set foot in that regulating state. The Amazon situation turns this situation inside-out, with a supplier being responsible for meeting the regulatory requirements of every tax-collection district … even though the supplier has no physical presence there.</p>
<p>Several posters have pointed out that many/most/all states have had Use Tax on the books for years, and have been unable/unwilling to enforce them. Can Amazon really do what fifty states’ Attorney Generals have been unable to do, and do it efficiently? The answer will say a lot … whichever way it turns out.</p>
<p>Attorney General’s have a very limited role in tax collection. States can collect the use tax it just is not cost effective to do so. That is why once nexus is established States make the retailer collect the tax.</p>
<p>Now that CA residents are being charged for items purchased OOS (through Amazon), California (logically) extends the sales tax to any item purchased by a CA resident and used in CA (as Amazon purchases are). That means every OOS bricks-and-mortar retailer would have to have at its disposal the same tax-collection apparatus required of Amazon. </p>
<p>That won’t happen of course. The Vermont Maple Syrup shop is safe … for now. But Amazon has gotten big enough to be targeted. So let’s be honest and call this “The Amazon Tax” … or if you prefer something more generic, the end of the sales tax exclusion for OOS retailers (with Amazon being the first company in compliance).</p>
<p>Of course this could be the impetus for a national sales tax. Consider … A man walks into the Vermont Maple Syrup shop to buy a box of Maple Syrup Candy. The clerk says “ID please.” But why? “Because if you’re from California I need to charge you the appropriate state, county and municipal sales taxes. I can waive the taxes if you’re going to consume this candy before you return to CA. But you need to fill out and sign an affidavit to that effect.” </p>
<p>This, of course, is based on the the premise that an item purchased from an OOS retailer by a CA resident for use in CA is subject to CA sales tax. (See, isn’t it a lot easier to describe it as “The Amazon Tax?”)</p>
<p>Trying to enforce Use Tax collection would be a nightmare. I live on the border between 2 states, which have a 4.5% difference in sales tax (state+county+local) rates. The entire region is rural as is 90+% of the state w/ the low sales tax rate. Folks who live in the state w/ the high sales tax rate have their purchases shipped to their workplace, relatives, and/or friends who have addresses across the river. Very few (zero) large retailers w/ online shopping have a physical presence in the state w/ the low sales tax rate - which translates into not just a 4.5% savings but close to a 10% savings.</p>
<p>Unless I am mistaken only purchases shipped w/o a sales tax are subject to a Use Tax. Thus, if an item is shipped to a neighboring state and that state’s sales tax is applied you are not required to pay the difference in the form of Use Tax to your state. </p>
<p>Question: You live in state A w/ a 10% sales tax rate and have an online purchase shipped to your work address in state B which has a 4% sales tax rate. No sales tax was applied to the purchase. Both states have a Use Tax on their books – to which state is the Use Tax owed?</p>
Not if the OOS store has no physical nexus in the state. That store wouldn’t have so-called “economic nexus” either, since the sale did not take place in home state.</p>
<p>2) Most states with sales taxes have reciprocity agreements with each other to avoid this. However, if your state tax is higher than the tax where you bought bought it, you are responsible for paying use tax on the difference.</p>
<p>There was a case here in MA recently where the state went after a tire chain across the border in NH, which has no sales tax. First they tried to force the store to collect sales tax on MA residents who crossed the line to buy tires. Then they tried to force to store to hand over a customer list of MA customers. NH responded by quickly passing laws to prevent either of these activities, and store took the state to court in MA. The state lost.</p>
<p>Colorado had the most aggressive affiliate and economic nexus laws on the books for awhile. Most if not all have been thrown out as unconstitutional.</p>
<p>Amazon is giving up the fight because they want to put warehouses everywhere, which gives them nexus.</p>
<p>NewHope any retailer that has nexus with a State must collect the tax. Nexus for sales tax means a “physical presence”. You can get physical presence through the obvious stores or warehouses or through certain relationships like agents, manufacturer reps. Certain services can create nexus. So the Vermont Maple Store is unlikely to have nexus with California.</p>
<p>^ tom - I believe that the definition of nexus is in the process of change. Ten years ago, if a product came in the mail from an OOS retailer, that retailer was outside the nexus unless the retailer had a bricks-and-mortar presence in the state. That definition is obviously changed. The question is whether the definition of nexus can be further “refined” to include other commerce currently not subject to taxation.</p>
<p>No it has not. These Internet companies have started to build warehouses and have also created schemes to have individuals located in all the States sell through their website. Thus the agency relationship.
Google Scripto v Carson</p>
Which is why trying to enforce compliance is like trying to give a speeding ticket to all the folks going 1-5mph over the speed limit. * not going to happen *</p>
<p>^ So as long as Amazon builds no warehouse in my state, Amazon won’t be collecting Connecticut sales tax? JMO, but I don’t think that position is endorsed by state tax collection bureaus.</p>
<p>Just a rhetorical question here, but why would Amazon build a warehouse in SoCal when they could simply build (and operate) it cheaper in Las Vegas? Reno, instead of Oakland? Delaware, instead of Philadelphia?</p>
<p>NewHope you need to ask them. They create nexus for themselves. If Amazon has agents in Connecticut you may end up being charged the tax. </p>
<p>NewHope I do this for a living we are not looking to stretch the law or create new ones nexus has been defined for years we know what it is. If a bookseller sells you books or gift cards and says you can return them to the store or use the card in the store don’t tell us that they do not have nexus. If a computer company sells me a computer and says they have a repair person in my State that will fix it for me as their representative don’t tell me they do not have nexus.</p>
<p>Many states are now trying to define nexus in economic terms, rather than physical terms. That is, if you sell more than a certain amount (say, $500,000) of goods to residents in the state, you are presumed to have nexus for tax purposes.</p>
<p>Many on these laws are being challenged on constitutional grounds, but who knows what will happen.</p>
<p>They will lose unless there is some tie to physical presence through some type of connection with real property or agents. There are different standards for sales tax and income tax nexus remember. Is the push for nexus in economic terms for income tax or sales tax?</p>