Amazon and the third party sellers aren’t being taxed. The consumers are.
Amazon could setup a big warehouse complex in South Dakota or something and avoid this problem — but they want to benefit from local distribution.
Amazon could setup a big warehouse complex in South Dakota or something and avoid this problem — but they want to benefit from local distribution.
Why on earth should selling goods from Oregon in Seattle not be subject to Washington sales tax, but selling goods from Seattle to Seattle be subject to it? This punishes local businesses, and encourages tax arbitrage.
As far as I see it, if you sell to residents of Washington, you have a presence in Washington.
You're supposed to pay "use tax" for things you buy from outside of your tax jurisdiction and didn't pay sales tax on. That's absolutely everything, technically.
For my state you're supposed to report all your out of state purchases on your income tax return.
The reason is because a given jurisdiction has no power to tax a business in another jurisdiction. They can tax you though,you are in their jurisdiction.
The local nexus concept is that once you have a presence in the state, you’re obliged to follow the laws of that state.
I live in New York. If I ship FBA inventory to my agent (Amazon) in a California warehouse, California wants me to follow their law. Makes sense, and is easily avoided by not using Amazon FBA.
Amazon plays it both ways. They get to avoid collecting sales tax by claiming to be just a fulfillment house, but they market in such a way that it is difficult to buy from them. In the process of making that argument, they push that legal liability to the smaller entities who use their site. Amazon is the asshole here.
The Supreme Court disagrees.
The buyer still owes use tax if their state requires it. But the out-of-state seller with no nexus in the state has no obligation to collect that tax or provide information under most circumstances to the state in which the purchase was made.
Do you really want to have trade wars between Washington and Oregon? Oregon tariff/taxes the fuck out of software and Washington responds by tariffing the fuck out of whatever Oregon makes a lot of? (probably weird shit, I've been to Portland once).
Edit: I think you are confusing it with income tax. What you are saying happens for salaried income in USA.
That said, it is a common misunderstanding, and it is made more so by companies that advertise "and we'll pay the sales tax!" They are always paying the sales tax, just most times they pass that cost along to the consumer.
While you are technically correct that this is how "sales tax" works, it's worth keeping in mind that in most states "sales tax" is mirrored by "use tax", and that these two "mutually exclusively" apply to the same purchases.
That is, if the seller is subject to the laws of a state they are generally required to obtain a "seller's permit" and to pay the sales tax, and are liable if this tax is not paid. But if a resident of that state purchases from someone who is not under that jurisdiction, the buyer then legally required to pay the same amount as a "use tax", and assumes the same liability. For California, see Question 1 here on "What is the difference between sales tax and use tax?": https://www.boe.ca.gov/sutax/faqtaxrate.htm#1
Which leads me to ask: for those of you in this thread saying "sales tax is not a buying tax", are you aware of the existence of this "use tax" and making a subtle semantic point that accidentally encourages illegal behavior, or are you unaware that of the interplay between the two? If previously unaware (and assuming you've ever purchased an item in a situation where sales tax was not charged), are you likely to change your behavior and self-report, or do plan to knowingly continue to engage in tax fraud?
(For the record, I do not self-report, although I do feel guilt about it.)
If you weren't required to collect sales tax, it is actually the customer who is on the hook to remit it. Of course, there's often no way to enforce this.
>Edit: I think you are confusing it with income tax. What you are saying happens for salaried income in USA.
Sort of but not really. Employers collect an estimated income tax liability based on your salary and what you've put on your W-4. The individual is still responsible for paying the right taxes and may be subject to penalties and having to make future quarterly tax payments if those withholdings are too low.
ADDED: The difference is the the government (in general) knows your taxable income and it's up to you to make the appropriate payments. In the case of sales tax/use tax, the government (thankfully) doesn't have the detailed and personal information to determine liability at the individual level so they have sellers do the up-front collection as much as possible.
If you spend a significant amount of money on something like a car that requires registration or regularly buy other goods in high dollar quantities in Delaware or New Hampshire that you enjoy at home in Pennsylvania, New York, Massachusetts, the tax man will notice and eventually show up to collect.
Some merchants bury that cost in the sales price, but generally speaking it’s a seperate line item that is treated differently. Merchants comingle those funds at their peril.