Barnes & Noble Looks to Scoop Up Amazon Affiliates
Amazon.com isn’t messing around in Texas. When the state
said the retailer would have to pay sales taxes just like all the other merchants
doing business there, it promptly announced it was closing an existing distribution
facility (119 jobs) in the Dallas area while scrapping plans to build another
(around 1,000 jobs) on the drawing board. It also said it would end its relationship
with all of its affiliates in the state.
The e-tailing giant said it was taking
the steps because of the "unfavorable
regulatory climate" in Texas.
The Texas state comptroller’s office had
sought to get Amazon to pay $269 million in what it claimed was unpaid sales
taxes plus penalties.
Allen Spelce, a spokesperson for Comptroller Susan Combs,
told the Austin-American
Statesman, "We regret losing any business in the state of Texas," while
adding, if you have a business presence in the state of Texas, you’re no different
than any other business in the state of Texas, and you still owe sales tax."
Texas
Governor Rick Perry was critical of the action taken by the comptroller.
While
the politics play out in Texas, Barnes & Noble is looking to gain
an advantage with an invitation to Amazon affiliates to join its network.
John
Foley, president of Barnes & Noble.com, wrote in an open letter published
yesterday, "Barnes & Noble wants Amazon.com affiliates who have been
terminated to know that you are welcome to join the Barnes & Noble affiliate
family. If Amazon doesn’t want you, we do! And, we will take care of
collecting and remitting all sales taxes due on BN.com sales to its customers
so you and our customers don’t have to worry about being hassled or prosecuted
by state tax auditors."
Danny Diaz, a spokesperson for the Alliance for
Main Street Fairness (AMSF), an organization of retailers supporting laws that
would require all to collect sales taxes, said in a statement, "Today,
Barnes & Noble made clear
the difference between a company that cares about small businesses and conducts
itself as a good corporate citizen versus another that is more interested in
exploiting a loophole that gives it an unfair, competitive advantage over brick-and-mortar
retailers throughout the country."
Discussion Questions
Discussion Questions: Is it time for all online retailers to collect sales taxes for states where they have customers? Will Barnes & Noble gain anything as a result of its letter to Amazon affiliates?
This is a tax loophole that should have been closed long ago.
As much as we like tax-free shopping online, it’s time for retailers to collect sales taxes for states. The technology exists to compute the tax. The states certainly need the money.
Existing sales tax laws at the recipient’s address must always apply to any delivered item. Period.
Amazon and other online and catalog retailers have used this loophole to their strategic advantage for many years. Texas is strapped for cash like many states and it is only the first to assert itself and enforce its laws.
By eliminating “nexus” (physical operating presence) within the state, Amazon may succeed in delaying the inevitable, but in the end it will be required to collect and pay sales taxes just like every other merchant.
Retailers each have to make their own strategic decisions on what to do about taxes in states that don’t. It all comes down to what’s best for the business. The answer will not be the same for every online retailer.
Regardless of your stance on e-commerce sales tax, the driver here is that the states are going broke and are desperate for revenues. They obviously don’t want to reduce spending so, being good politicians, they go where the money is and where there are no potential voters to aggravate, in this case Amazon. In the interim, current and potential jobs go down, with a retailer with problems of its own announcing they will step in to save the day.
As an independent retailer–a Main Street USA Mom and Pop store–I would like to see a level playing field. When a customer comes into my store and sees something, and tells me he can get it online for approximately the same price with shipping, but won’t have to pay tax on it, that’s not level.
My state is raising the sales tax this year. I bet if online retailers collected and remitted sales tax to my state, the state would not need to raise the tax on the honest people supporting in-state business.
Yeah, I know it’s a sales and use tax and each individual is supposed to pay tax on their internet purchases. Most of my customers don’t know that, and the ones that do just ignore the law.
To me, it’s not about collecting the tax, but an attempt to break up Amazon. If it doesn’t have brick and mortar locations, how can it be taxed?
This also applies to merchants who don’t operate in states where the tax is collected.
These states just don’t want to cut spending or impose new taxes on businesses and residents. They seek an easy way out.
Picking on Amazon isn’t the solution. Every state can’t look to Amazon to bail them out of the spending mess they started during the boom.
It is time for the playing field to be level and all play under the same rules. There should not be a competitive disadvantage to having a brick and mortar location where taxes are collected and an e-commerce location where taxes are not. While I, along with many others, have enjoyed the loophole; it is time for competitive fairness to prevail.
Amazon is flexing it’s muscles now; but wiser thinking will prevail. They will rethink their plans to leave any state.
The lack of state sales taxes on the internet has been a driving force in online retailing and has helped created a vast new industry of online sales. It’s been wonderful for the industry, online retailers, and consumers, but the industry is now very strong and the time has come for online sales to be treated the same as other retailers. Amazon and others have long outgrown their tax-free training wheels; it is now time for them to cowboy up and play by the same rules as everyone else.
While sales taxes are COLLECTED by the retailer, they are PAID by the consumer. The retailer does not pay sales taxes on what it sells. The consumer pays sales taxes on what they buy.
It is that simple. The problem in Texas is that it is charging AMAZON (yes, AMAZON should collect Texas taxes). Texas should be sending the shoppers bills. The shopper (me included) who doesn’t pay a sales tax on an internet purchase is robbing their state of deserved revenues.
With regard to B&N, they are taking very smart strategic action.
It’s time for the states to make it easier to collect taxes by using one rate for the whole state. Here in Oklahoma there are hundreds of different tax rates depending on school district, fire district, veteran-tax-free, farm tax-free counties, cities, who knows what to collect and where to summit? If it could be easy to report or better yet, carved out of the payment and sent directly to the state without forms, it would be easier.
I disagree with my colleagues. Traditionally the retailer was responsible for collecting taxes. In a brick and mortar environment it was simple…if the retailer sold it, they collected tax on it. However, catalog companies, mail retailers, etc. have never had to collect tax on items that were sold out of their home state (or if they had a warehouse there). Now with the Internet, things should change? This would mean that any Internet retailer would have to collect tax on sales for every state that it sells product in? What about shipments that are outside of the USA? Who enforces the tax collection, since there is no national sales tax initiative? What type of burden does this put on the states to collect taxes from retailers located in other states? What about other countries?
This is a tax nightmare that doesn’t necessarily result in an increase of tax revenues, since many small states would have to initiate employees to enforce tax collections in all 50 states, court cases and fines to be levied against bad businesses, and new laws to be passed to enforce internet commerce. Worse yet, it starts to question states rights vs. federal rights and who is responsible on a federal level.
Unfortunately this is a federal question and has to do with the interstate commerce clause. The fact that Texas acted independently will end up costing Texas more revenue than could have possibly been produced. Additionally it will cost Texas jobs (which is the real revenue producer). Some politicians saw a convenient horse and jumped on it. They just want to look good to people who don’t understand the issues or the economics of the situation. All Texas gained were the slots in the unemployment line that the fired Amazon employees filled.
If a consumer who lives in Texas, purchases a product from an online retailer that does not exist in Texas, sales taxes should not be paid, period. If the State of Washington wants to impose taxes since that is where Amazon is headquartered, they should do so. But not the State of Texas.
And for all of the people who think that charging the consumer the tax is proper, you would then have to agree that the Use Tax is proper as well. By law, if you purchase a product in Wisconsin, pay tax in Wisconsin, but use it in Illinois, Illinois has a right to charge a Use Tax. How does this make sense?
Sales Taxes impede business growth….end of story!
I don’t disagree with a customer paying a tax on items purchased (assuming they know up front what that amounts to), but I would object it to them being forced to pay two taxes–one for the state in which they live and once for where it was shipped from and/or where the company was headquartered.
It’s time to put Main Street on equal footing with online businesses. If one is required to collect the taxes, all doing business in a state should collect the taxes. Amazon continues to lose ground with their recent decisions.
True life experience. I needed new tires for my car. Looked at TireRack and Discount Tire Direct. Got good prices and didn’t have to pay sales tax. Then I went to Costco and bought the same tires and paid less than either of the internet tire sites. Yes $56 in sales tax was included in my total price and it was still less than the internet sites. I don’t think the real issue here is paying taxes; I think it is out of pocket cost. In this case a local retailer kicked the Internet retailer’s price in the rear and collected sales tax to boot. Maybe the other local retailers should pay more attention to their supply chain cost and quit whining about competition.