Amazon Shuts Distribution Center to Avoid Paying State Sales Tax

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   Nelle Hoxieposted 13 years ago

   http://www.dallasnews.com/business/head … ispute.ece
   
   Sorry I should have included the state in the topic heading. TEXAS was using the argument that the distribution center created a physical presence in the state, so the state sales tax was valid. Now that Amazon has closed the distribution center, they might just come after affiliates as the local nexus. They've already considered the location of a server as local nexus.
   
   And no before someone suggests committing tax fraud - getting a post office box in an adjacent state doesn't count as moving out of state. The only way you avoid this is to move out of a state with this type of tax.

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      lakeerieartistsposted 13 years agoin reply to this

      Too bad the state didn't consider that now it will also lose income tax for all the people that will now be unemployed.  Yeesh!

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      Cagsilposted 13 years agoin reply to this

      Nothing like driving business away or trying to manipulate people even more than already done. No wonder the Economy in America continues to struggle. So much for the politicians' claims, for knowing what they are doing.

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      teamrnposted 13 years agoin reply to this

      I attempted to get an Amazon affiliate account, but it was denied. Yep, I life in one of the states (Colorado) that they have a problem 'with,' They also don't do business' in North Carolina and I think Texas.
      
      I almost asked my sister in another state if I could use her address, but decided that was WRONG. Just plain Wrong. Do I think Amaon is right for penalizing my state's citizens when it has a dispute with the state of Colorado. No, but two wrongs never made a right!

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      Mark Knowlesposted 13 years agoin reply to this

      Much as I hate to say it - you are never going to avoid this. Sooner or later all the states will get on the bandwagon. One way or another, Internet sales are going to have a sales tax forcibly applied and it will  be the legal responsibility of the seller to collect it.
      
      I am sure it is worth putting up a fight - but it will only delay the inevitable.
      
      My personal living tax has tripled in the last 2 years. France could not go this route to collect the money they need to pay back the loans they are committed to. They already collect 19.6% VAT on all Internet sales. 

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      Wesman Todd Shawposted 13 years agoin reply to this

      Okay, I've got an amazon associate account, and made my first sales with them here on Hubpages here recently.  I also live in Texas, I just woke up. . . .could someone tell me how this effects me????

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      tritrainposted 13 years agoin reply to this

      This is just getting aggravating. 
      
      Once they shut down affiliates it will mean less income, so these idiotic state reps are going to end up with less money.

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      J Sunhawkposted 13 years agoin reply to this

      It should be noted that this was a decision made by an administrative judge, a flunky bureaucrat who is unaccountable to the people via the ballot box. And I'd bet this fascist judge pulls in upwards of $150,000 salary, plus benefits and a bloated pension. Why would she care? No skin off her fat nose.
      
      Unelected bureaucrats writing law is a favorite tactic of totalitarian dictatorships.
      
      Texas legislators could fire that judge tomorrow and write any law they want to make sure Amazon stays in Texas. But they won't. Legislators across the country have created an unelected  bureaucratic monster that can write law, enforce the law and judge the law. Unelected dictators writing law is not a good idea for a representative republic.

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   Nelle Hoxieposted 13 years ago

   Yes, no matter how many times Amazon and other online retailers play hardball, some states continue to have their blinders on. But the affiliate community is to blame as well. They aren't educating the state lawmakers as to the consequence. Affiliates just keep sticking their heads in the sand and saying Amazon can't do without this state or that. And it's not just Amazon, most other affiliate programs won't deal with the affiliates either.

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   lakeerieartistsposted 13 years ago

   Is there a lobbying organization for affiliates?

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   Nelle Hoxieposted 13 years ago

   Yes http://www.performancemarketingassociation.com/

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   rebekahELLEposted 13 years ago

   what's going on in Illinois with Amazon affiliates? I read that Illinois wants to impose the internet sales tax there also. I know we have some prolific hubbers from Illinois.
   
   I found this article dated 1-20. It did pass and is waiting to be signed by the governor. If signed, it would take effect in July.
   http://www.theshriverbrief.org/2011/01/ … sales-tax/

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   Aya Katzposted 13 years ago

   When Amazon closes a distribution center, does this mean they will no longer deliver goods to that state? Or will they just use a more circuitous route of getting the goods there?

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   rebekahELLEposted 13 years ago

   I guess a lot of distribution workers lost their jobs, terrible.

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   Nelle Hoxieposted 13 years ago

   Aya they'll just ship the stuff from a neighboring state.
   
   But the point for Texas affiliates is that they went after the distribution center for physical nexus. The next item on the physical nexus food chain is Amazon Affiliates.

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      Aya Katzposted 13 years agoin reply to this

      Yes, but since we are not involved in the physical delivery of goods, that would really be overreaching. All we do is help to advertise.

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   thisisoliposted 13 years ago

   Meh, just means I will have to use a UK account and physical address with my UK business as the owner, just means tehy il be losing out on some of my tax revenue. 
   
   I don't believe this issue is still being discussed, since every state that has done it so far is predicted to be losing money, especially after several prominant Internet Marketers moved out of state and took their millions with them.

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      ryankettposted 13 years agoin reply to this

      I completed a SWOT and PEST analysis recently, in fact I completed a whole marketing and business strategy with the objective of doubling my income this year. I listed the possibility of the UK changing tax laws as a threat. Unlikely, but possible. I also noted the rising corruption levels in the UK (proven), a corrupt country is not one which many affiliates (e.g. Google in India etc) want to operate in. We just never know what is around the corner. The bulk of my strategy this year evolves around diversification, mainly diversification of income streams. I have two primary income streams and another which is half decent, I want five substantial income streams; losing one then won't ruin me.

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      Mark Knowlesposted 13 years agoin reply to this

      Until you get caught. I think you underestimate how badly the governments need to collect money, and how aggressive they are going to get over the next few years. They have been printing it for several years - now the time is coming to pay the piper.
      
      We ain't seen nothing yet.

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         Pcunixposted 13 years agoin reply to this

         There's a very simple solution: take the burden of collecting sales taxes off Internet sellers and make it their responsibility only to report the sale to the State.
         
         In most States, it is the individuals responsibility anyway. My Massachusetts tax form has a place where I can report purchases I made where sales tax was not collected. I do that, and pay the tax owed with my income taxes.
         
         However, that has the disadvantage of delay.  As Internet purchases are hardly ever done by check or cash, States could make it the responsibility of credit card companies and Paypal etc. to collect and pay the tax - they'd scream bloody blue murder, of course, but they'd also get get the very real benefit of float on the money collected.
         
         However, the whole point of the laws that originally did not allow States to force out of state businesses to collect their taxes was that it put an unreasonable burden on business - it's not the collecting of the tax that bothers Amazon - they'd love the float too. What they don't want is the hassle of dealing with 50 different jurisdictions, each with their own forms, their own exemptions and varying rates (even different rates for different items), specific reporting requirements and so on. They are quite right to object to that and, as bad as it would be for a giant like Amazon or PayPal, it would be absolute hell for a small business like mine.
         
         
         If the States could standardize on reporting and took the burden of collecting off businesses, I wouldn't  object.  For example, if all I had to do was report a sale made in a State and be done with it, I'd be happy.  I'd be happy if the credit card company or PayPal etc. dealt with collecting the tax too, but they would rightfully expect standardization. 
         
         One thought would be a central tax clearing house responsible for determining and collecting required taxes. It would take its cut, of course, but it could make everybody happy. It would know all the rules and a business like mine would simply simply hand the actual sale over to it.  They'd collect the money, adding whatever tax is needed. They'd pay me and pay whoever else needs to be paid. 
         
         Of course what I'm describing is just PayPal or Google Checkout.   They could do this.

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            tritrainposted 13 years agoin reply to this

            It would require Amazon and the like to associate the location of the buyer with the commission.

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    Nelle Hoxieposted 13 years ago

    Thisoli it's YOUR physical presense in the state, not where your business is located, that creates the nexus in most affiliate nexus laws. But hopefully it won't come to it.
    
    Where have you read about prominent internet marketers leaving a state. I would be interested in the list.

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    Mutiny92posted 13 years ago

    is there a list of what states are currently not being supported by Amazon Affiliates?

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       Nelle Hoxieposted 13 years agoin reply to this

       North Carolina, Rhode Island, and Colorado. Please note these are not the big tax and spend liberal states that people usually criticize for their tax policy. Georgia and South Carolina have formed commissions to hold hearings to look at it. Connecticut and California are actively considering legislation.
       
       Check out the Performance Marketing Association website if you want to learn the latest and stay up-to-date.

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          ryankettposted 13 years agoin reply to this

          The idea that California could be considering that move is ludicrious, considering how much they rely on bluechip business.

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             relacheposted 13 years agoin reply to this

             State governments are not known for their level-headedness when in the midst of a fiscal meltdown.

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                Pcunixposted 13 years agoin reply to this

                If people were honest, we wouldn't have any of this.
                
                I bought a new printer in December and paid no sales tax to Amazon. I will report that purchase and pay the tax when I file my State income tax return.
                
                That's all it really would take.. but of course the world is filled with cheats.

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          Mutiny92posted 13 years agoin reply to this

          I currently live in California but I am transferring to Virginia soon...If CA implements this, then the biggest impact may be on the 40% Hubpages portion..

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          tritrainposted 13 years agoin reply to this

          And Illinois

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    Nelle Hoxieposted 13 years ago

    The IRS and state departments of revenue share information. It's very hard to play games. Amazon also wasn't born yesterday. They have been very good at weeding out local affiliates.
    
    Better just to fight this. Other states have defeated it, once they understood the real impact.

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    Nelle Hoxieposted 13 years ago

    Well they are Ryan. You know US HP affiliates really need to get out of the political forums and spend more time reading about their profession and the impact of tax policy on their industry.
    
    My state, the big liberal Massachusetts isn't actively discussing it - and hopefully won't be. But a bunch of us are working to educate state reps, so that they'll know better.
    
    And like you, I'm preparing for the worst and I'm moving a big chunk of my biz away from the pure affiliate model because of this trend.

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    Nelle Hoxieposted 13 years ago

    Actually Virginia has considered such a tax in recent years as well.
    
    Wesman Todd Shaw - Because of the way the US Constitution limits the states - they can't intefer with inter-state commerce.
    
    So to tax a company like Amazon they have to show a local presence or nexus within their state. That's why Texas wrote the law to include something like a distribution center. That's why Amazon shut it down, so they won't have a physical presence in the state. Texas has also considered that if your computer server is in the state that constitutes a physical presence. Now that Amazon has shut down their wharehouse, the next logical step for Texas to take is to go after the affiliate nexus.
    
    Most states that have gone after out-of-state online companies have used affiliates as the local presence or nexus. That's why Amazon breaks their relationship with local affiliates when these kinds of taxes pass. And it's not just Amazon. When the New York affiliate nexus passed I had friends that were making well into the six figures lose 90% of their income, because most merchants refused them as affiliates.
    
    The best place to stay up-to-date is the Performance Marketing Association. I posted the link above.

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    Nelle Hoxieposted 13 years ago

    I disagree with you Pcunix, Amazon loves the fact that they don't charge their customers tax. QVC charges me a tax every time I shop with them. They aren't bothered by the local tax structure. Amazon can easily figure out how to handle local taxes, why would they?
    
    Amazon was ready to pull the plug on Connecticut affiliates, when CT was planning to make Amazon just report local purchases, so the state could bill the customer. They are playing hardball, to keep their tax free status.

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       Pcunixposted 13 years agoin reply to this

       It's not that easy.  QVC obviously needs local distribution, so they are forced to deal with it, but it is not easy.

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    Daisydotposted 13 years ago

    What I find puzzling about this is that Amazon UK seems to have no problem handling VAT on goods. It just got increased to 20% in January, and they complied and changed all their prices and everything. No threats to affiliates. I guess that's because the VAT applies to the entire country, and even if they re-located to another EU country, they'd still have to pay VAT as everyone has it (though the rates vary).
    
    I guess once all the American states have an online sales tax, Amazon will have to comply (and let all the affiliates back in) - unless they can relocate to Mexico and do business from there?

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       ThomasEposted 13 years agoin reply to this

       Well, if you want to do business in the EU, you have to pay VAT, and the UK is right slap bang at the average VAT level for the EU.

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       Aya Katzposted 13 years agoin reply to this

       Are the same products that are sold on Amazon.com more expensive when sold on Amazon.co.uk? If so, by how much?

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          ThomasEposted 13 years agoin reply to this

          I haven't done anything scientific, but I'd say the US amazon is substantially cheaper... but that's not a surprise, as a rule of thumb, UK prices are between 25%-30% higher than the US equivalent.
          
          Then again, Amazon.com doesn't include sales taxes, whereas the price they quote on .co.uk is the price you pay.

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             Aya Katzposted 13 years agoin reply to this

             Then, presumably sales in the UK will not be as brisk, even adjusting for population size.
             
             Does anybody out there serve as an Amazon.co.uk affiliate outside HP? How do sales on similar items compare?

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                ThomasEposted 13 years agoin reply to this

                The UK spends more money per capita online than any other country in the world.
                
                Online is still cheaper than the shops.
                
                it is pretty easy to get Google #1 spot, but Amazon.co.uk is exceedingly stingy... it has a £7 cap on commissions, so it is not really worth going for items over £100.

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                   Aya Katzposted 13 years agoin reply to this

                   ThomasE, thanks for the information! I had no idea. That seems like a very bad deal for affiliates.

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          kirstenblogposted 13 years agoin reply to this

          I assume that prices with amazon will vary just the same as they do with other sites. The difference is variable based on the current exchange rate. I sell with a site where I can sell to both the UK and US (and others). I have made sales in GBP's worth a nice little chunk, had the order cancelled and then the person came back and bought the same item but from the US side of the site and the person saved a few quid in the end. I didn't mind cause a sale is a sale, only lost around about £1 from the buyer using USD's instead but they saved a lot by doing that. It is why I love pay pal, I can be paid in any currency and leave it as that currency until I want to exchange or just spend it

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             Aya Katzposted 13 years agoin reply to this

             Sounds like you have a lot of experience with this. Let's hope that the US side remains open to business. As global traders, we don't have much to gain from shutting down Amazon.com.

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                kirstenblogposted 13 years agoin reply to this

                I personally think it will go a very long way in harming the US economy and it aint in great shape at the moment. What Nellie is trying to do here is absolutely huge, if the amazon affiliate programs in the states drops that is going to mean a huge loss for the whole economy there. With friends and family there I don't particularly want to see the US become even more depressed. It will be something the reps regret (assuming they figure out what they did!) if all the states do it and affiliates all come from abroad.

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    Nelle Hoxieposted 13 years ago

    All the US states won't do this. Getting 50 states to agree on anything is impossible. Some of the states will realize that they will become an affiliate haven - and reap the benefit of all of our collective income tax - which is actually quite substantial.
    
    It not just state tax policies, counties and cities have different sales tax laws as well.
    
    I don't think Europeans can truly understand how decentralized we are. Remember the United States of America, really is 50 different governmental entities, each with a substantial amount of power.

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       tritrainposted 13 years agoin reply to this

       Wouldn't that be nice!
       
       I say Minnesota and Iowa should be the havens. 

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    tritrainposted 13 years ago

    The Nexus Legislation Map is from http://affiliateadvocacy.com/map-of-nexus-legislation/
    
    Some of the states have already enacted legislation, as this map is from 2010.
    
    Here is a very interesting article on multiple events that can trigger changes in state nexus
    http://www.accountingtoday.com/ato_issu … table=true

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    Nelle Hoxieposted 13 years ago

    I actually do that as well. But I mostly buy from online stores that already charge tax, so I don't have to remember to report it.
    
    Have to admit that it's not out of the goodness of my heart. I remember a few years ago when some states went after online cigarette buyers buy issuing a sopeona for the online cigarette company customer records. Some folks were hit with state tax bills for thousands of dollars.
    
    It's only a matter of time before it happens again. I prefer to pay a little at a time. But not every state has this law.
    
    (I've never driven to New Hampshire to avoid a liquor sales tax either.)

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       Pcunixposted 13 years agoin reply to this

       I do it from a sense of obligation. I benefit from the services these taxes provide. I drive on the roads, I am protected by the State Police and so on. I believe in paying my fair share.
       
       You can probably guess I am not a Republican

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    paradigmsearchposted 13 years ago

    I remember reading this somewhere years ago…
    
    There are states that routinely ask banks for all their customer’s credit card records. The state then reviews the transactions looking for and noting the out-of-state purchases. The state then sits back and waits…
    
    Yep, apparently the states can look at your credit card transactions whenever they want.

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    kirstenblogposted 13 years ago

    I guess what is most likely to happen is people like me (living outside the US) will be doing most to all the affiliate selling for amazon products and that money will come our way, into our economies, America loses all that revenue. Well it wont make you guys feel better but it will make my local stores smile, since they will get my money, earned selling stuff in the US. Hmmmm.....

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       Aya Katzposted 13 years agoin reply to this

       Kirstenblog, why is there an Amazon.co.uk which is separate from Amazon.com? Aren't there local taxes that apply to UK purchases, and isn't that how those taxes are handled?

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          kirstenblogposted 13 years agoin reply to this

          The .co.uk extension means that UK residents can buy in GBP's, and sellers can sell with that as the main currency. I think the combination of ease of no currency conversion plus the sense of wanting to 'buy british' makes the extension sensible . Of course if you separate them it probably makes life a bit easier in terms of taxes within the country.
          
          As for the taxes, I am not sure exactly what I will be needing to do as my earnings are just not enough to have to declare them. Once I am getting a nice chunk of money each month with reliability I will have to go visit the local tax offices. I do work a 'normal' job tho and I do not 'do taxes' every April. Thing is, my taxes get taken at the point I get paid (as well as every time I spend money, so pay taxes when I earn, pay taxes when I spend and if I don't leave the country then I will pay one final tax when I die! ). I do appreciate not having to file my taxes each year tho
          If you have kids or some other consideration you can apply for tax benefits, basically you get the money from the government that you should have just kept in your pay check in the first place! A process that costs money no less! The Brits are very good at wasting money Brazil style (check out that movie if you have never seen, its SOOO British! LOL).

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       Nelle Hoxieposted 13 years agoin reply to this

       Before you start counting your chickens, I bet Amazon closes it's American Affiliate Program and you lose the American consumer market - if the affiliate tax goes national in any way. I doubt if many Americans shop on Amazon.co.uk.
       
       BTW, I showed a previous post where you were hoping to capitalize on the misery of American affiliates to a couple of Mass state reps. It was very effective in showing them why they shouldn't pass the tax.

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          kirstenblogposted 13 years agoin reply to this

          You showed a post I made to your local reps?! Thats brilliant! My sarcastic humour may well do some good for folks in your state at any rate
          See, humour could save the world
          I do think it's bloody mindedness, if folks don't stop shopping at amazon with the loss of the affiliates (my family don't even know what an affiliate is, even tho I have tried to explain to them, so they would keep buying) what will happen is that the USD will bleed into other economies. Not bad for those economies sure, but that don't make it right, not when the US is in one mother of a depression economically speaking. If you want, take any of my posts to state reps your side of the pond and scare their trousers off! I will be a vulture if one is needed

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    Aya Katzposted 13 years ago

    Is it true that Hubpages only does business with Amazon.com, but not with Amazon.co.uk?

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       kirstenblogposted 13 years agoin reply to this

       Thats a big yup! Too bad too cause the exchange rate sucks! I reached payout ages back but with fees and stuff, I put my payout up just so that my first check will actually be worth more then a bottle of cheep booze!

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       ThomasEposted 13 years agoin reply to this

       Yes. They have been in talks with .co.uk, but so far have no agreement.

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          kirstenblogposted 13 years agoin reply to this

          Really?!?! Oh that would be cool!

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    EmpressFelicityposted 13 years ago

    I'm just wondering... does anybody know what overall percentage of Amazon.com sales are made via affiliate links?

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       prettydarkhorseposted 13 years agoin reply to this

       I think about 40 percent

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          EmpressFelicityposted 13 years agoin reply to this

          That seems like a lot - do you have a link?
          
          If I'd been guessing off the top of my head, I'd have said maybe 5-10%.

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             prettydarkhorseposted 13 years agoin reply to this

             http:  en.wikipedia.org/wiki/Amazon.com
             
             under the sub topic third party sellers

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                EmpressFelicityposted 13 years agoin reply to this

                Wow - I had no idea it was that much.  Although it does say "citation needed"
                
                Reading that section in Wikipedia, it does seem as though Amazon is cutting its nose off to spite its face by dropping affiliates in those US states which impose sales tax on Internet purchases.  After all, the states could well say "as long as you've got customers in our state who buy your stuff, then you have to find some way of collecting the tax."  (Looks as though New York already tried that one and failed, but what failed once might succeed somewhere else with another state and a different lawsuit).

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                   Aya Katzposted 13 years agoin reply to this

                   Affiliates are advertising publicists, they don't actually sell anything directly to the customer. I don't even know in which states people are who purchase from Amazon through my Amazon capsules. How would I enforce the sales tax laws of a state I don't even know is involved in the sale?
                   
                   Sales tax applies to the transaction through a nexus. Even if I were in Texas, the Texas tax would not apply to out-of-staters ordering by mail.

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       tritrainposted 13 years agoin reply to this

       Affiliates are free advertising for Amazon and the like.
       
       If we went away many of the publishers would be forced to advertise.
       
       This Nexus Legislation is seriously a bad idea.

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    prettydarkhorseposted 13 years ago

    obviously amazon doesn't want to be burdened by the complications of decentralized tax laws here. Too much work for them.
    
    Tx is really short on budget (fiscal deficit) so they are maximizing options to collect tax, and the outcome is this - closing of the center for distribution. Amazon says NO.

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    thisisoliposted 13 years ago

    I might need to get politically active in Austin!

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