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STEEL CAGE DEATH MATCH ON SALES TAXES

Posted by Admin Posted on Mar 17 2011

It's Wal-Mart, Target, Best Buy, Home Depot and other large "bricks and sticks" retailers against Amazon.com.

Amazon is physically connected to few states, and is only required to collect sales taxes in those states where it is.  Even though the buyers are required to pay use tax if they don't pay sales tax, few do so, giving Amazon a price advantage.

Retailers present across the country are pushing for the states to force Amazon to collect sales taxes.  States, hungry for tax revenues, are eager to cooperate, and Amazon is fighting back.

When Texas went after Amazon for sales taxes because of a warehouse in the state, Amazon closed the warehouse.  When six states imposed sales taxes on Amazon sales made through affiliates with physical presence in those states, Amazon immediately cancelled thousand of affiliate contracts. Amazon is also lobbying for sales tax exemptions before building warehouses in new states.

The world has changed dramatically since the US Supreme Court required a physical presence before a state could force a retailer to collect sales tax.  That case, Quill, was about a catalog retailer, back when the internet was in its infancy.  It will be interesting to see if the US Supreme Court gets back into the issue to update its Quill opinion for the new reality.

And if the states win on the sales tax issue, look for the next battle to challenge the federal law that prevents them from imposing income taxes on companies that have no presence in the state.

I just tried to buy some software through Amazon because they offered a good price and free second day shipping.  But Amazon wouldn't complete the order unless I gave them permission to memorize my credit card information for future transactions.  (The website described memorization as an option, but wouldn't move to the next page.)

I contacted customer service who told me how to erase the data after I saved it.   They couldn't tell me how to not give it to them in the first place.  The service rep arranged for a higher level rep to call me back.

Surprisingly, I got that call in less than 10 minutes.  The new rep told me point blank they wouldn't sell me the product if I didn't let them memorize the credit card information.  So I thanked them for their time and told them I would buy the product elsewhere.

I found it at J&R for $10 more. They got the product out the same day and gave me free overnight shipping, so it ended up costing me less overall.

I may be old fashioned, but I am not a Luddite.  On this issue, I say "Good Luck" to "bricks and sticks".  Let's keep the playing field level.

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