your £$ support needed

part of a small rebellion | by maryann johanson

question of the weekend: If Amazon (and other online retailers) are forced to collect sales tax from you, will that change your online shopping habits?

An editorial this week in The New York Times commented on Amazon.com’s current fight with the state of North Carolina, which is battling the retailer over the issue of collecting state sales tax.

Right now, the law is that only if an online retailer has a physical presence in a state — such as offices or brick-and-mortar stores — must it collect sales tax. Sales tax is still due otherwise, but the buyer is supposed to voluntarily send it in to their state coffers, which of course never happens.

From the Times:

Enter North Carolina. Unable to get Amazon.com to collect the taxes, the state recently began an audit of online businesses, trying to track down what it assumes are millions of dollars in uncollected taxes. The state has told Amazon that it wants buyers’ names and the amounts they spent. That state also needs to know the general categories of spending, like books or movies or food, because some items are tax exempt. Amazon has refused to comply, claiming in federal court that North Carolina may be able to learn the titles of books and movies that its customers have bought, imperiling privacy and free speech. North Carolina officials have said they are not seeking those details. Now it is up to the court to decide whether Amazon will have to reveal the names of customers, without titles.

This case is not really about privacy and free speech. It’s about how far Amazon is willing to go to protect a business model that relies on not collecting sales tax. Noncollection gives Amazon a major unfair advantage over rival retailers that do collect sales tax and deprives hard-pressed states of much-needed revenue.

(There’s more on Amazon’s privacy and free-speech argument at a reported article at the Times, and it’s not quite as specious as it might sound. And there are many complicated legal issues involved, too.)

Thing is, I’m not sure that Amazon’s model depends upon it not collecting state sales tax. Amazon’s model seems, to me, to be about choice and convenience. I buy a lot of stuff on Amazon, and yet when a recent new law (which Amazon is appealing) compelled Amazon to begin collecting state sales tax in New York in 2008, I honestly barely noticed. And I can’t imagine not shopping on Amazon: I’d really rather not run around to the few physical stores that stock, say, DVDs, because those stores are not likely to have what I’m looking for. And if I did find the DVD I wanted, I’d still have to pay sales tax on it. Yes, I’ll have saved Amazon’s shipping costs, but I’d have wasted a lot of time that I don’t have to waste.

So this weekend’s question (which comes via reader bronxbee):

If Amazon (and other online retailers) are forced to collect sales tax from you, will that change your online shopping habits?

(If you have a suggestion for a QOTD/QOTW, feel free to email me. Responses to this QOTW sent by email will be ignored; please post your responses here.)

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  • I would not care. We have Amazon Prime shipping, so I am still saving shipping costs.

    Sure, sometimes one of the reasons of my decision to buy from Amazon steps from the fact that I won’t have to pay sales tax, but that is more of a bonus.

    I’d still have the ability to buy almost anything and get it in 2 business days.

    I shop at Amazon for convenience – sometimes Maine just doesn’t have what I need.

  • “stems” not “steps”. ugh.

  • Mo

    Hmm… I had to look this one up. I do order from Amazon.ca occasionally, but couldn’t remember if they charge sales tax or not. They do, apparently: http://www.amazon.ca/gp/help/customer/display.html?nodeId=918716 So I guess that answers that question for me. If you are charged sales tax normally, how is being charged for an online order any different?

    The point where I would start to worry is if tax laws changed in a way that muddied up or prevented international purchases. Amazon.com has a lot of stuff that Amazon.ca doesn’t, and Amazon.co.uk is the first stop for things not available in North America. I could see draconian laws making a mess of that. But then maybe Amazon would put a system in place to order from an international site through a local one if it ever happened.

  • I_Sell_Books

    It would depend on the item I’m buying…

    Besides, if the Gub’m’nt really wants to collect taxes on online retail sales, all they have to do is implement a 1% tax – can you imagine how much money that would net? Hell, you can do it by state, you don’t need to collect specific customer details, just the State and the amount. Done deal.

  • Drave

    If all online retailers were required to collect tax from me, it would not change my habits at all, because I live in a state without sales tax. If I didn’t, it would definitely cause me to buy way fewer things, and my impulse purchasing would decrease the most. In my opinion, this hypothetical new system would help the government increase its revenue, but it would also have serious negative impact to all other areas of the economy, leading to a drastic decrease in sales, and causing many smaller companies to close their doors, as well as discouraging economic growth in general.

  • JoshDM

    Yes. Of course, we don’t pay State Tax in my state, and since I itemize taxes, I deduct my Actual Sales Tax on my Schedule A (the amount I pay in Sales Tax each year is always more than the table for Sales Tax for my income level and state gives me). The only problem is entering all the receipts into Excel.

  • Cori Ann

    I’ve got Amazon Prime as well, so free two day shipping on anything that qualifies. So paying state sales tax wouldn’t really bother me because I still wouldn’t have to go to the store to get it, and I’d pay roughly the same or less–because most of what I get on Amazon I get because it is cheaper (or more likely to be in stock) than in the bricks and mortar stores. So, no, wouldn’t really change my shopping habits at all.

  • I remember a social studies teacher I had in junior high who told us that cheating on taxes was unpatriotic because you were depriving your elders of social security and taking food out of the mouths of soldiers defending your country. He said a true patriot would over pay their taxes (I accidentally did once and the IRS sent me a check, so I’m not sure that’s possible). This would have been in the 80s, FYI.

    So I think Internet companies should pay, and charge, a federal sales tax, and no, it would not change my shopping habits.

  • aquila6

    As someone who lives in the state of North Carolina and who might potentially end up having to pay the state a rather large amount of “use tax” (their euphemism for the amount of sales tax you didn’t pay) for all of the purchases I’ve made over the years, I sincerely hope that Amazon sticks to their guns and tells the state of North Carolina to fuck off and die. Our local politicians are a bunch of moneygrubbing assholes who will do anything they can for a buck.

    I’ll still keep buying stuff from Amazon either way, because they have a better selection than any local B&M store. But if they just roll over to NC and cough up information that might hit me in the wallet, I will not be happy. If some judge eventually orders the release of such information, I expect Amazon to do the right thing and to irrevocably purge their records of all previous transactions with anyone in NC.

  • I am actually someone who does pay sales tax on the items he buys online. Astonishing, I know! In New Jersey, when you pay your taxes, that’s one of the items to fill out. Unless you’ve purchased over a rather large amount, you can pay an estimated tax based on how much you’ve purchased online without paying taxes. So I figure, what the hell? It’s a couple of bucks, it keeps me nicely in compliance with the law, and I’m a tax-loving liberal who realizes that money goes to pay for roads and police and important stuff like that.

    Anyway, more to the point of the question, no it would not change my buying habits at all. The lack of sales tax is not the reason I shop on Amazon, and it never has been. They have great prices regardless of the tax, amazing selection, great service, fast delivery, etc. etc. I shop at Amazon to immediately find what I’m looking for, possibly read reviews on it, and get it at a cheap price. That beats the hell out of driving around to 3 or 4 stores to find what I want instead.

  • Cindy

    Brick and mortar stores that think this will make a hill of beans worth of difference are sorely mistaken. Amazon’s attraction is a wide selection of merchandise both new and used that I can buy at a fraction of what I would pay if I purchased locally. That is assuming I could even find it locally. I’m a big buyer of DVD’s. I can often get items new for 50% to 70% off. So suppose I find what I could buy locally for $100 for $50 at Amazon. Virginia sales tax adds 5% = 2.50 to the price. Locally I would pay $100 plus $5. I’m looking at paying $52.50 at Amazon versus $105 locally. Remember shipping is free at Amazon on orders over $25. What, exactly, is supposed to induce me to jump in my car, sit in obnoxious traffic, and pay an extra $52.50 at some local store?

  • Amazon already charges sales tax on my purchases, so no, it wouldn’t affect my online shopping per se.

    I’m just about at the end of my Amazon Prime free trial, and trying to decide if I should keep it. I’m thinking not. As Cindy said, any purchase over $25 is usually eligible for free shipping anyway, just with a slightly longer delivery time, so I just try to remember to purchase birthday and Christmas gifts ahead of time. And if it’s a purchase for myself, I don’t mind a little delayed gratification.

    I also just found out that, apparently, Amazon Prime raises the prices on some items for its Prime customers; whatever you save in 2-day free shipping, they make up for in the price increase. Not cool.


    What, exactly, is supposed to induce me to jump in my car, sit in obnoxious traffic, and pay an extra $52.50 at some local store?

    It’s true, Amazon is very attractive for its many heavily-discounted items, and if it’s a price difference like $50 versus $100 I’d definitely go with the cheaper offer at Amazon. But I do feel guilty sometimes about, say, browsing at my local indie bookstore, making note of the titles I’m interested in, then going home and purchasing them for less at Amazon. If it’s not a huge price difference, I’m trying to be better about patronizing the bookstore when I can, because I’d rather live in a neighborhood with cool little bookstores than one without.

    (Of course, being able to get free books and dvds from the library doesn’t help the local stores either, but that’s another story.)

  • Oh, Bluejay, GUILT GUILT GUILT for not supporting your indie bookstore. ;)

    Portland, OR, so spoiled me with its indie bookstores and Movie Madness (the name of an actual movie rental place).

  • misterb

    It’s a general rule that they teach you when you become an investor – don’t make your investment decisions based on the tax consequences. It works the same for buying something from Amazon.com. Of course, there are some people who hate taxes so much that they lose money so as not to pay taxes – of course, they’ve already gotten what they deserve.

  • drewryce

    Amazon is fully in the right of it. When you get on line and order a book from a store in Oregon or the UK you have not purchased an item in your home state. Therefore, there should not be a sales tax applied in your home state. It is rather like a New Yorker driving up to Vermont and buying something there to be shipped to his home address.

    The North carolina move is just the tip of the iceburg. New Hampshire and Vermont are currently in a fight over one states attempt to force the other to charge and collect it’s taxes on traveling state residents.

    How on earth can Amazon keep track of the 50 different state (and thousands of municipal) tax districts then collect information for each of the foreign jursidictions?

  • Actually, that’s not true, Drew. You are still supposed to pay sales tax on out-of-state purchases. The only difference is that the company is not obligated to collect it at the time of the sale, it’s up to the purchaser to pay it after the fact.

    Amazon could easily keep track of the different tax districts and collect sales tax. I used to work at a (slightly smaller) company that did exactly that. We collected whatever sales tax was due on every single order we processed. The reason we did that was because we mostly sold to businesses. Unlike your average joe buying a couple books and DVDs from Amazon a year, a business that might be buying thousands or tens of thousands of computer equipment a year will keep track of those sales and pay the appropriate tax because they will actually get audited for that. The IRS isn’t going to come after you for not paying $3.50 worth of tax on the $50 of stuff you bought from Amazon. But for a company that bought $90,000 worth of servers desktops and the like? Uh, yeah, they’ll come after that. So in our case, we collected the tax up front, and made the bookkeeping for the businesses easier on the back end, which they appreciated. Anyway, the point is, you sure as hell can collect the proper tax no matter where you’re selling to, and it’s not all that complicated.

  • Left_Wing_Fox

    Frankly, it probably wouldn’t change my shopping habits much. I buy online for the wider variety and better deals than I can get in this town, the sales tax (or lack of it) dosen’t really factor into it.

  • JosephFM

    A similar proposal was floated in Florida this year (full disclosure: I interned for a Democratic State Representative at the time), and I fully support it.
    We have huge budget holes year after year, we don’t have an income tax and likely never will (unfortunately, says this liberal), and property taxes are still rather high in spite of both large cuts/exemptions and the real estate crash.

    I don’t actually make many online purchases unless the price difference if huge or I’m paying for a download (and yes, I pay for music and movie downloads, because artists need to make a living damn it), so it would not likely have much of an effect on me.

  • I_Sell_Books

    Yes, yes, patronize the indie bookstore when you can!

    Bias, what bias?

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