

Federal court tosses Colorado's Amazon tax - taylorbuley
http://www.denverpost.com/dnc/ci_20316979

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camz
I've read the actual caselaw and determined that Judge Blackburn made the
correct legal decision according the facts of the case.

That doesn't mean that conclusion that "Sales Tax in Colorado shouldn't be
collected." It merely means that the Judge made the right call because the law
or legal statute was written by an idiot. It's significantly different from
NYS' Amazon law that it takes an indefensible position.

Sales tax under Quill v North Dakota has always stated that SALES TAX
specifically and not income/franchise tax has a physical presence requirement.
Colorado was stupid because they specifically call out non-resident/companies
without a physical presence to comply with a series of demands (reporting,
notices and etc) that cost crap tons of money. There's an obvious undue
hardship here.

The interesting thing is that NYS' position was much smarter they used the
affiliate nexus rules. Instead of going after Amazon directly, they simply
stated that Amazon had a physical presence in NYS due to the affiliate
marketers in the state. The number of affiliates substantiates a "nexus or
connection" within the state to require sales tax. This absolutely works!

Don't get your panties in a bunch because this aint over by a long shot.
Whoever wrote the law should be shot because any tax professional worth their
salt should've seen this coming.

This is coming from a guy that specialized in State and Local Tax at KPMG and
defended audits on behalf of Goldman Sachs and etc. I recently had my opinion
drafted by Tax Analysts (Tax.com) incase you're wondering about my background.

I'm going to do a full and detailed writeup on my site later tonight

~~~
fpgeek
Indeed. I expected to see an article about "affiliate nexuses" being thrown
out. IMO, that would have been a huge deal. Now that I understand the details
of this case, I am underwhelmed.

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kposehn
Woot. I'm pretty sure this will finally push many of the other Affiliate Tax
laws off the books as well.

/dancesajig

~~~
_delirium
In states where Amazon has _no_ presence, probably (if other courts agree),
but with some of the states going after Amazon, like Texas and California, the
status is murkier, because Amazon has a physical presence there, but via
subsidiaries, which it argues don't count, but the states argue do count. They
seem to be settling those cases and conceding the point, though; they've
agreed to start charging sales taxes in Virginia and California next year, and
Indiana, South Carolina, and Texas sometime in the next two years.

~~~
forrestthewoods
Would it make sense to charge sales tax on sales done through affiliates but
not the rest of Amazon? Or maybe it's already done that way?

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blahedo
> _"Enforcing a reporting requirement on out-of-state retailers will, by
> definition, discriminate against the out-of-state retailers by imposing
> unique burdens on those retailers," Blackburn ruled."_

This is such bullshit. _Not_ charging sales tax on items bought out-of-state
will, by definition, discriminate against the _in_ -state retailers by making
their prices significantly higher.

~~~
binarycrusader
I'm sorry, but the whole tax system is broken anyway.

Online retailers (excluding the shell games that some companies play) do not
benefit from a state's services, so why should they bear the burden of
collecting taxes for that state?

Most states have a use tax that is the responsibility of the taxpayer to pay
to make up for this; I should know, I just filed my taxes and _paid_ it.

~~~
dkrich
>Online retailers (excluding the shell games that some companies play) do not
benefit from a state's services, so why should they bear the burden of
collecting taxes for that state?

Really? That's interesting, I always thought these roads I drive on were paid
for by the state. I don't really see many state-enabled services that brick-
and-mortar's consume that internet retailers don't.

~~~
bdonlan
The online retailer pays shipping companies, and those shipping companies do
indeed have a nexus in the state and pay various taxes as appropriate. One
could argue that asking the retailer to pay as well is a form of double-
dipping.

~~~
dkrich
That argument could be extended to any business operating anywhere. If we only
paid taxes based upon what we directly consume from the government, I don't
think many businesses would be collecting sales taxes. Your lease is paid to a
landlord. Your inventory is purchased from a distributor. Your insurance
premium is paid to an insurance company.

~~~
cagey
So, I, in California, buy something from Amazon, which pays Fedex to ship it
from out of state to me. Fedex pays "gas taxes" in CA, and other CA taxes
too[1]. If Fedex ships my pkg by air, there are at least additionally airport
fees/taxes.

Since Fedex is not going bankrupt, it seems Amazon is at least paying Fedex
enough to offset these expenses, so Amazon is in effect, through Fedex, paying
these CA taxes (the same ones that in-state B&M stores would be paying for
shipping a purchase to me, or that I would be paying if I bought an item at a
local B&M store and transported it in my own motor vehicle).

Now, in my understanding, the purpose of these taxes is to pay for the
"services" CA is providing to the taxpayer (in this case, Fedex, and,
indirectly, Amazon). For a shipper, "services" would include construction and
maintenance of (and bureaucratic overhead associated with) the roads, bridges,
airports, etc.

But in your opinion Amazon is skating on their responsibility and should in
addition charge sales tax to the customer (apparently for additional "services
provided by the state" not covered by the above)? What are these additional
services Amazon is receiving (in this transaction) from CA that are not being
paid for via [[the above-mentioned]] taxes?

[1] <http://www.dmv.ca.gov/vehindustry/mcp/mcpfaq.htm#what>

[[edit]]

~~~
dkrich
I'm not making any judgment about whether Amazon is "skating on their
responsibility." I'm just trying to explain to people who are misunderstanding
that states CAN CHARGE SALES TAX. This case has nothing to do with whether the
state can charge a retailer a sales tax. They can. There is no doubt about
that. The issue here is that the law, as written, was unconstitutional.
Further, those who are claiming that brick and mortars consume a state's
services but online retailers do not are wrong. This notion that retailers pay
shippers who pay taxes makes zero sense.

