This seems like a rather glaring omission to have gone unaddressed for so long by such a giant? Has it not come up before?
It's complicated because Amazon isn't the one who owes the state taxes -- it's the marketplace sellers. This is a different situation from the previous cases of "nexus" which determines state taxes that Amazon itself owes. That nexus case was resolved and Amazon has been paying its own state taxes for many years now.
In other words, Amazon already pays all sales taxes for items that say "Ships from and sold by Amazon.com." Amazon does not file sales taxes for items such as "Sold by RareOldBooks and Fulfilled by Amazon."
Even if Amazon added a "sales tax" line item for 3rd-party marketplace sellers, it's still up to those marketplace entities to properly file their state tax forms and declare Amazon sales revenue. The state regulators know that Amazon can't file on their behalf but they'd at least like some "help" from Amazon by way of audited reports so they know which marketplace sellers to pursue.
In contrast, Ebay does have the ability for sellers to add sales tax for bidders when they check out. However, it's optional. Ebay doesn't actually collect the sales tax money for sellers. In other words, Ebay is just providing a sales tax "calculator" rather than acting as a sales tax "collector". Paypal also doesn't collect and pay sales tax on behalf of sellers.
Sales tax regimes were all worked out in a time when most sales were local, brick and mortar. The world has changed drastically since then - it's time for tax laws to catch up a little too.
See https://www.ecommercechris.com/south-carolina-amazon-collect...,
https://www.ecommercechris.com/amazon-sales-tax-amnesty-need...
https://www.sellerlabs.com/blog/sales-tax-amnesty-what-do-i-...
Right, South Carolina in particular wants to change the "seller of record" from the marketplace sellers to Amazon itself. Most of the other states are targeting the marketplace sellers and they want more of Amazon's help in that. (E.g. add explicity sales tax line items like Ebay and provide audit reports to help identify sales tax evaders.)
For even a small seller, you're maybe looking at thousands of dollars a year for that much paperwork. So you'd have to have hundreds of thousands a year in revenue for that to make sense.
* Do you impose tax in the state where the seller resides?
* Do you impose tax in the state where the buyer resides?
* Do you impose tax in the state where the item is warehoused?
So number 2 should probably not be about where the buyer resides, but where the buyer ships the product.
If I am a resident of New Hampshire, and my wife buys me a sandwich online that I eat in California, why would California be cheated out of their tax?
Buyers then prefer sellers who collect taxes for them. This forces Amazon and other marketplaces to collect the tax.
The law already requires this in aggregate (use tax from the buyer of sales tax wasn’t paid). Very similar to how you can only claim dependents if your provide their social security number. Great way to bring entities into tax payment compliance.
If people and Amazon paid their damn taxes, we wouldn’t even be discussing this.
There are thousands of sales tax jurisdictions in the US, between states, counties, and cities. There is no way you, as a little guy, can manage all that.
It's not though. If I live in California and have a presence only in California and ship a widget to Pennsylvania, I'm under no requirement, as a matter of constitutional law, to collect PA state sales tax on that purchase. What the buyer states, on their own state tax forms, is their own business.
This specific case, about sellers affiliated with Amazon but not part of Amazon, is ultimately for Amazon, its affiliates, and the states to resolve. There isn't a role for an independent startup. The same would apply to present or future networks of sellers in the same vein.
Attempting to justify tax evasion with constitutional law is unacceptable.
Personally, I'll be sure to vote against any representative who advocates for databases of online purchases or anything in that vein.
(1) Sort of. NH, for example, does have a relatively high tax on meals eaten in restaurants.
The only wrinkle is that #2 is not very well enforced when a company doesn't have a presence in the buyer's state, but it's still technically required.
https://www.law.cornell.edu/supct/html/91-0194.ZO.html
Amazon got pressured to collect in some states by those states considering Associates and other programs to constitute a nexus.
Note that in most (all?) states [that have a sales tax] the buyers supposedly have to pay sales/use taxes anyway. The debate is whether Amazon has to collect those taxes on behalf of the state.
They are too weak to enforce their laws. Their decision making process comes down to enforcing its tax regime and possibly losing all the commerce when the big company just moves away - increasing their irrelevancy and underfunding - or not bringing it up at all.
Only a select few governments, national governments, and multinational governments are relevant enough to coax corporations into compliance.
And even then, they are just trying, as the entire framework of their government's existence can be successfully challenged by the corporation's lawyers.