Beginning of the end of Amazon?

[Tekneek]

Originally Posted by ISiddiqui

As stated above:
We'll go with the retailers' argument - the state where the purchaser lives. After all, that is where the buyer decides to purchase what the seller is offering.

I can get behind this. Everyone has to prove their place of residence to ever buy anything anywhere. They have to collect sales tax based on where I live, not where they are. At least you would have a better idea of what your expenses will be when traveling, since you know what your sales tax rate will be for every single transaction.

[Tekneek]

Originally Posted by JonInMiddleGA

FTR, I'm entirely opposed to the new measure - regardless of what rate is used - ... unless of course they'll use the windfall to roll back other existing rates by at least an equivalent amount. (sorry, not holding my breath on that one )

Hah. I was at a hearing for turning Georgia 316 into a toll road several years back. I mentioned at the hearing that I would support it as long as I could deduct the tolls paid from my state income tax. The consultant says, "I have never heard of that happening." "Ok, I'm against it." At least we won on that one. 316 never became a toll road.

[ISiddiqui]

Originally Posted by Tekneek

I can get behind this. Everyone has to prove their place of residence to ever buy anything anywhere. They have to collect sales tax based on where I live, not where they are. At least you would have a better idea of what your expenses will be when traveling, since you know what your sales tax rate will be for every single transaction.

You are just being silly pedantic now and making no sense. The sales tax is collected at transaction place. Retailers have argued that when buying online, the sale is completed as the residence of the buyer - that's where the purchaser actually purchases the good. I figure that's a good enough explanation for where the online transaction occurs for me.

And if the purchaser buys it on an electronic device somewhere else, when for shorthand sake, we'll determine the residence if the place of sale - just as the online retailers have been saying for days. An exception, sure... but one that makes infinite amounts of sense.

[Tekneek]

Originally Posted by ISiddiqui

And if the purchaser buys it on an electronic device somewhere else, when for shorthand sake, we'll determine the residence if the place of sale - just as the online retailers have been saying for days. An exception, sure... but one that makes infinite amounts of sense.

If I call them, and they process the sale manually at a POS terminal by entering my card data, did the sale still happen at my home? I think good policy requires that we define all of these things in a consistent manner across the board in order to be "fair."

I don't really care so much what existing retailers have been arguing. I want an equal standard applied to all businesses.

[ISiddiqui]

Originally Posted by Tekneek

I think good policy requires that we define all of these things in a consistent manner across the board in order to be "fair."

I don't really care so much what existing retailers have been arguing. I want an equal standard applied to all businesses.

Well if you would like to apply retroactive taxes to these companies in their home states, go ahead. I think we should give them the benefit of their own argument, though. To be "consistent".

[RainMaker]

Originally Posted by ISiddiqui

You realize that most of Amazon's losses are due to the fact that they are selling Kindles at a loss, right? Also Amazon bought LivingSocial last year, which cost them quite a bit of cash (and LS isn't make them much at the moment).

As for Walmart, its the most profitable business in the world. What a comparison .

Look at the biggest and most profitable companies in the world. Awful lot of brick and mortar stores in there. No online retailers to speak of. I mean if there is this enormous competitive advantage as I'm being told, why aren't these online retailers making money hand over fist? Why are brick and mortar stores still kicking the shit out of them?

[RainMaker]

Originally Posted by JPhillips

Keep in mind that for years on-line retailers have argued that their physical location for order processing can't be taxed because the sale happens in whatever state the purchaser lives in.

They can't have it both ways.

That's not what they are arguing. They're arguing that it's up to the purchaser in that state to pay the sales tax (fill out the usage tax form). They are the person who lives in that state and benefits from the resources in it. That a business operating out of New York should not be responsible for collecting and distributing taxes for a state they don't operate out of.

If a state doesn't like people going out of state to purchase products to avoid taxes, they can step up their enforcement of tax cheats or lower their sales tax so that people don't go elsewhere. If your state taxes things at 10% and people run off to avoid it, that's your own legislators fault. Not the fault of a business halfway across the country.

[JPhillips]

Originally Posted by RainMaker

That's not what they are arguing. They're arguing that it's up to the purchaser in that state to pay the sales tax (fill out the usage tax form). They are the person who lives in that state and benefits from the resources in it. That a business operating out of New York should not be responsible for collecting and distributing taxes for a state they don't operate out of.

If a state doesn't like people going out of state to purchase products to avoid taxes, they can step up their enforcement of tax cheats or lower their sales tax so that people don't go elsewhere. If your state taxes things at 10% and people run off to avoid it, that's your own legislators fault. Not the fault of a business halfway across the country.

That is what they have been arguing to avoid sales tax in their home state. The method of paying in the purchaser's state may be disputed, but the idea that the purchase happens in the state of the purchaser has been their shield for years against sales tax in their state of incorporation.

[ISiddiqui]

Originally Posted by RainMaker

Look at the biggest and most profitable companies in the world. Awful lot of brick and mortar stores in there. No online retailers to speak of. I mean if there is this enormous competitive advantage as I'm being told, why aren't these online retailers making money hand over fist? Why are brick and mortar stores still kicking the shit out of them?

Ask Borders and Barnes & Nobles.

[cougarfreak]

Originally Posted by ISiddiqui

Ask Borders and Barnes & Nobles.

I don't think they are in trouble because of online retailers. I think they were slow in adopting and implementing to the digital age. Same goes for newspapers, and music stores. Their physical product is disappearing, and they don't know how to deal with it. Amazon did. They sell MP3's and ebooks.

[RainMaker]

Originally Posted by ISiddiqui

Ask Borders and Barnes & Nobles.

The irony of this is that both those companies grew thanks to nuking the shit out of indie bookstores. Going into a neighbors, building colossal stores that were too big, and undercutting all the other bookstores until they went out of business. Now when it happens to them, we're supposed to shed tears.

Both those companies died by their own doing. Both failed to innovate and change their business models as time went on. Nothing would have stopped them from having a robust online store that could deliver to people just like Amazon does. Nothing stopped them from creating their own e-reader at an earlier stage. They chose to build too many stores, too fast, when it was clear the landscape of retail was changing. Their failures are their own doing.

[RainMaker]

Originally Posted by JPhillips

That is what they have been arguing to avoid sales tax in their home state. The method of paying in the purchaser's state may be disputed, but the idea that the purchase happens in the state of the purchaser has been their shield for years against sales tax in their state of incorporation.

Yeah, I know they're arguing both ways. They should have to collect for orders from people in the state. I'm just saying they shouldn't be collecting sales tax for states they do not do business in.

[molson]

Originally Posted by cougarfreak

I don't think they are in trouble because of online retailers. I think they were slow in adopting and implementing to the digital age. Same goes for newspapers, and music stores. Their physical product is disappearing, and they don't know how to deal with it. Amazon did. They sell MP3's and ebooks.

I think that's the point though. If Borders and Barnes and Nobles were better at adapting to the digital age, and selling MP3's and ebooks, then they'd just be online retailers like Amazon. There's no reason to go to a physical store for a MP3 or ebook.

[JPhillips]

Originally Posted by RainMaker

The irony of this is that both those companies grew thanks to nuking the shit out of indie bookstores. Going into a neighbors, building colossal stores that were too big, and undercutting all the other bookstores until they went out of business. Now when it happens to them, we're supposed to shed tears.

Both those companies died by their own doing. Both failed to innovate and change their business models as time went on. Nothing would have stopped them from having a robust online store that could deliver to people just like Amazon does. Nothing stopped them from creating their own e-reader at an earlier stage. They chose to build too many stores, too fast, when it was clear the landscape of retail was changing. Their failures are their own doing.

The people that made the decisions that led to the "failure" made a shit ton of money. They might have made more if they had innovated earlier, but they made out well regardless. It's hard to get organizations to change when the leaders are grossly rewarded for pumping up the share price ASAP and still get compensated when everything falls apart.

[ISiddiqui]

Originally Posted by cougarfreak

I don't think they are in trouble because of online retailers. I think they were slow in adopting and implementing to the digital age. Same goes for newspapers, and music stores. Their physical product is disappearing, and they don't know how to deal with it. Amazon did. They sell MP3's and ebooks.

Also, the government asks them to pay more than their competitors.

Seriously, how can people NOT understand what an advantage that is? How would you like it if your biggest competitors didn't have to pay taxes that your company had to?

B&N, for one, wasn't really slow to adapt to the digital age. Arguably their Nook products have been better than Kindle products. Hell, Microsoft wants to buy the Nook from B&N. However, a lot of their business was originally big box bookstores, so they had to straddle the line, and obviously their costs for running physical bookstores is greater - part of that is greater prices and sales taxes (I really don't think the OP is the only person who shops at Amazon to avoid sales tax).

Originally Posted by RainMaker

The irony of this is that both those companies grew thanks to nuking the shit out of indie bookstores. Going into a neighbors, building colossal stores that were too big, and undercutting all the other bookstores until they went out of business. Now when it happens to them, we're supposed to shed tears.

Both those companies died by their own doing. Both failed to innovate and change their business models as time went on. Nothing would have stopped them from having a robust online store that could deliver to people just like Amazon does. Nothing stopped them from creating their own e-reader at an earlier stage. They chose to build too many stores, too fast, when it was clear the landscape of retail was changing. Their failures are their own doing.

Can you decide which argument you are going to use? Because you said this:

I mean if there is this enormous competitive advantage as I'm being told, why aren't these online retailers making money hand over fist? Why are brick and mortar stores still kicking the shit out of them?

And then two posts later said "nothing stopped them from creating their own e-reader". So are brick and mortar stores "kicking the shit" out of online retailers or should the brick and mortar stores have gone online quicker?!

Make up your mind.

[ISiddiqui]

Originally Posted by RainMaker

Yeah, I know they're arguing both ways. They should have to collect for orders from people in the state. I'm just saying they shouldn't be collecting sales tax for states they do not do business in.

They do business in Georgia as I just bought something from Amazon while sitting at my computer in GA. How is that not doing business in my state?

[RainMaker]

Originally Posted by ISiddiqui

They do business in Georgia as I just bought something from Amazon while sitting at my computer in GA. How is that not doing business in my state?

When does the Amazon delivery truck pull up and deliver it?

[ISiddiqui]

Originally Posted by RainMaker

When does the Amazon delivery truck pull up and deliver it?

Irrelevant.

[RainMaker]

Originally Posted by ISiddiqui

Irrelevant.

You said they do business in Georgia. Where exactly is that taking place? You went to their website that is based in another state and ordered a product that is warehoused in another state. They have absolutely nothing to do with Georgia.

[ISiddiqui]

Hell, if I can sue Amazon.com in Georgia (which I can because putting out a commercial website to residents of GA constitutes purposeful availment sufficing the minimum contacts requirement), how is that the state of GA can't collect taxes on that purposeful availment?

[ISiddiqui]

Originally Posted by RainMaker

You said they do business in Georgia. Where exactly is that taking place? You went to their website that is based in another state and ordered a product that is warehoused in another state. They have absolutely nothing to do with Georgia.

I went on their storefront (their website, which may be accessed anywhere) in the state of Georgia. I purchased their goods in the state of Georgia.

The transaction happened in GA. End of story.

[molson]

Originally Posted by RainMaker

You said they do business in Georgia. Where exactly is that taking place? You went to their website that is based in another state and ordered a product that is warehoused in another state. They have absolutely nothing to do with Georgia.

If they shipped a defective product to another state, and someone was injured, long-arm statutes would give the victim the right to sue the business in their own state court even if the business never set foot there, based on the company conducting business activities in that state. If you decide to expand your business and start selling your product in the Netherlands, you're going to have to make sure you're up on Dutch copyright, patent, and tax law, and pay a lawyer to insure your compliance. So the law recognizes that you conduct business outside your borders even if it's just through the mail or the internet. Here, though, I don't think Congress even needs that kind of precedent. If they want to impose this regulation on businesses, they can.

[RainMaker]

Originally Posted by ISiddiqui

I went on their storefront (their website, which may be accessed anywhere) in the state of Georgia. I purchased their goods in the state of Georgia.

The transaction happened in GA. End of story.

If that's your definition of doing business in a state (being able to access their website), shouldn't all online retailers be required to not only register their business in every state, but also pay business taxes to those states and localities?

[ISiddiqui]

Originally Posted by RainMaker

If that's your definition of doing business in a state (being able to access their website), shouldn't all online retailers be required to not only register their business in every state, but also pay business taxes to those states and localities?

Why register? You can have a home site and do business in other states without having to register in them. For instance, AT&T isn't registered in all 50 states - but they sure as Hell do business in every single one.

[Tekneek]

Originally Posted by ISiddiqui

They do business in Georgia as I just bought something from Amazon while sitting at my computer in GA. How is that not doing business in my state?

They aren't a Georgia business. I believe they are what is considered a "foreign entity" under Georgia law. By our own laws in this state, Amazon is not a Georgia business. Any business that is operating in Georgia is no longer considered a "foreign entity" and that is recorded by the state government. Nobody is alleging that they are improperly registered in this state. I may not have the terms exactly right, as it has been a while since I took my crash course in it here. However, they do not have a business presence here as far as business licensing/registration goes.

And as far as that goes, Amazon does collect the sales tax for third-parties resident in your state that Amazon does the fulfillment for.

[Tekneek]

Originally Posted by ISiddiqui

Why register? You can have a home site and do business in other states without having to register in them. For instance, AT&T isn't registered in all 50 states - but they sure as Hell do business in every single one.

If you are a coporation/LLC/partnership doing business in Georgia without the knowledge of the Secretary of State's office, then I believe you would be considered in violation of the law. If Amazon is operating here, they would have to be doing it as a sole proprietorship, right?

Edited to add that I believe only a single human being (not another business) can own a sole proprietorship in Georgia, which would make this a violation unless Jeff Bezos has established residence here and is running the business directly.

[RainMaker]

Originally Posted by ISiddiqui

Why register? You can have a home site and do business in other states without having to register in them. For instance, AT&T isn't registered in all 50 states - but they sure as Hell do business in every single one.

If they are operating a retail business in a particular area as you state they are, it's only fair that they abide by the same rules as the B&M. Many cities/states/counties require retail licenses to operate in their jurisdiction.

You can't have it both ways by saying they are operating their business in your state when collecting sales tax but at the same time are a foreign entity not operating in the state when it comes to licenses, taxes, and other fees.

[Tekneek]

Originally Posted by RainMaker

You can't have it both ways by saying they are operating their business in your state when collecting sales tax but at the same time are a foreign entity not operating in the state when it comes to licenses, taxes, and other fees.

This shows how complicated this really is, if we're going to actually try to have a level playing field. The same rules and regulations that apply to everyone. They're making an end-run as a cash grab. All the more disturbing is that any business would encourage the government to go after another business in a tax grab. I hope they're as enthusiastic when the state decides to target them next time. We wouldn't want them to "have it both ways" where they want government making a tax grab against their competitors but not against themselves, right?

A lot of brick & mortar enterprises, particularly the big players, get tax incentives from state/county/city governments. Let's abolish that immediately as well, or give it to everyone.

[ISiddiqui]

Originally Posted by RainMaker

If they are operating a retail business in a particular area as you state they are, it's only fair that they abide by the same rules as the B&M. Many cities/states/counties require retail licenses to operate in their jurisdiction.

You can't have it both ways by saying they are operating their business in your state when collecting sales tax but at the same time are a foreign entity not operating in the state when it comes to licenses, taxes, and other fees.

I see y'all haven't addressed AT&T. They aren't registered in the state of Georgia (aside from being a foreign entity, which, btw, Amazon is as well), but I see their stores all over the place. And when I buy a phone from them (though I'm with Verizon, it applies anyways), they charge me sales tax on it.

So how then is that possible, according to you?

[CU Tiger]

I can only speak to SC, BUT in SC it is illegal to collect sales tax on behalf of the state unless a business specifically and physical nexus in the state. Actually I'm pretty sure Ga is the same way, as I know I've shipped equipment into Ga before and could not collect sales tax. However as a retailer the onus really isn't on me to pay sales tax, despite what we are lead to believe. Again in sc the onus is on the buyer to pay sales tax. Many retailers collect this as a cnvenience, and law pushed it this way pre net and tracking days there was no other way to know who bought what.

Again in sc at the end of the year, amazon sends me a statement of how much I bought, ifill in a single line on a form and go about my business.

Btw the local tax argument is a bit iffy. Every state has a uniform sales tax rate. Local municipalities can impose an additional tax if they choose, but that money is t paid to the state, it is payed to the municipality as part of your business licensing arrangement.

Btw tell me again why flat tax is so easy?

[CU Tiger]

Originally Posted by ISiddiqui

I see y'all haven't addressed AT&T. They aren't registered in the state of Georgia (aside from being a foreign entity, which, btw, Amazon is as well), but I see their stores all over the place. And when I buy a phone from them (though I'm with Verizon, it applies anyways), they charge me sales tax on it.

So how then is that possible, according to you?

AT&T wireless or AT&T hard waited phone service, two different laws.

The physical phone lines are protected by federal law under a unique set of circumstances.

The wireless cell phone stores, those certainly collect taxes and I will wager they have a business license in every one of those stores, furthermore I'd wager they are certainy registered in the state of GA. Again they have a place of nexus.

Finally many if not all of those cell hone stores are actually franshised these days as authorized retailers and aren't owned by vow/att at all.

[JonInMiddleGA]

Originally Posted by CU Tiger

Local municipalities can impose an additional tax if they choose, but that money is t paid to the state, it is payed to the municipality as part of your business licensing arrangement.

Eh, that one must vary by state.

In Georgia, local sales taxes are collected at the register just like the basic state sales tax and are remitted to state to be (eventually) disbursed back to the county/city governments from the state department of revenue.

[RainMaker]

Originally Posted by ISiddiqui

I see y'all haven't addressed AT&T. They aren't registered in the state of Georgia (aside from being a foreign entity, which, btw, Amazon is as well), but I see their stores all over the place. And when I buy a phone from them (though I'm with Verizon, it applies anyways), they charge me sales tax on it.

So how then is that possible, according to you?

Each store is licensed to operate in the respective locale. Look behind the counter and you will see it. You can't just open a retail location and forego licenses because you happen to be headquartered elsewhere.

[ISiddiqui]

Originally Posted by RainMaker

Each store is licensed to operate in the respective locale. Look behind the counter and you will see it. You can't just open a retail location and forego licenses because you happen to be headquartered elsewhere.

Only third party stores have to register themselves as state corporations. Official carrier stores are under the foreign corporation sphere.

For example (Georgia's Sec State Corporations page now requires to you sign in, so I'll use Alabama's):

Business Entity Search By Name

[ISiddiqui]

Originally Posted by CU Tiger

The wireless cell phone stores, those certainly collect taxes and I will wager they have a business license in every one of those stores, furthermore I'd wager they are certainy registered in the state of GA. Again they have a place of nexus.

It appears, at least in Alabama, and I doubt its different in GA - Verizon is listed as a foreign corporation and that filing appears to encompass all of their carrier stores.

[ISiddiqui]

Actually, should probably compare it with Barnes & Noble, which, like Verizon, is a "foreign corporation" in Alabama and hence is not required to do all the filings or pay the corporate taxes that a domestic corporation has to...

Business Entity Search By Name

[Tekneek]

I just went into the local AT&T store, about a mile from my home. It had the typical business license in it, just like the two restaurants nearby, the Publix, the Petsmart, and the Subway. I wonder where Amazon keeps theirs.

I used the wrong terminology. A foreign entity is a business operating in Georgia, but is not based on Georgia. In general, all retailers are required to register.

I got this from the Secretary of State's website:

Is a foreign corporation required to file with the Secretary of State of Georgia?

Georgia laws indicate that a “foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.” However, each law lists a number of activities that “do not constitute transacting business.” Thus, if a company’s business falls into one of those categories, it is not required to file with the Secretary of State.

Corporations desiring to register as a foreign corporation should review the provisions of O.C.G.A. 14-2-1501 (profit) or O.C.G.A. 14-3-1501 (nonprofit) to ensure that they are in compliance with Georgia laws. Limited liability companies should review O.C.G.A 14-11-702.

It's unclear to me that Amazon would be exempt if they are actually transacting business in the state, under the Georgia code.

Also, if Georgia truly believed that Amazon was transacting business in the state, why would they have worded their "Amazon tax law" from last year the way they did? Surely those contortions would not have been required if they thought the company was already meeting the sales tax requirements.

[CU Tiger]

Originally Posted by JonInMiddleGA

Eh, that one must vary by state.

In Georgia, local sales taxes are collected at the register just like the basic state sales tax and are remitted to state to be (eventually) disbursed back to the county/city governments from the state department of revenue.

Right and I worded my post poorly.
Mechanically it goes to the state and the state sends it back to the local muni..but what I am trying to say is the muni sets the rate and reaps the reward

[CU Tiger]

Originally Posted by ISiddiqui

Actually, should probably compare it with Barnes & Noble, which, like Verizon, is a "foreign corporation" in Alabama and hence is not required to do all the filings or pay the corporate taxes that a domestic corporation has to...

Business Entity Search By Name

Ok maybe I am dense.
Are we greying the line between state income tax and sales tax?

A business only pays state income tax in the state it incorporates as far as I ever knew.

For example we were licensed to do EC work and did work in NC, SC, GA,TN and VA every year for the last 5 I was in business. But I paid federal and state income tax/filings on to IRS and SC.

Now sales tax is collected from a customer and passed directly up line. Sales tax has to be collected at each transaction point and at the rate for that location. When I would ship equipment, in SC for example there was a 3 point swing between say Greenville City Proper and Pickens county for example. So depending on the customer were we offloaded the equipment could make a HUGE difference on large equip sales.

I thought I was following along the discussion but the quoted post seemed to take it towards corporate tax and not sales tax,

[RainMaker]

Originally Posted by ISiddiqui

Actually, should probably compare it with Barnes & Noble, which, like Verizon, is a "foreign corporation" in Alabama and hence is not required to do all the filings or pay the corporate taxes that a domestic corporation has to...

Business Entity Search By Name

You're talking about the registration of a business. We're talking about licenses to operate in states. Each AT&T store needs to be licensed as a retailer to operate in the particular city/state. They all have the certificates with it on it.

[Tekneek]

Originally Posted by RainMaker

You're talking about the registration of a business. We're talking about licenses to operate in states. Each AT&T store needs to be licensed as a retailer to operate in the particular city/state. They all have the certificates with it on it.

Probably my fault for confusing the issue, or at least not clearing it up at all. Any retail establishment will need a business license from the local municipality - a city, county, and less likely at a state level. I'm not aware of any state that doesn't have this requirement at some level of government. You can't just start transacting retail business in an area without that. Certainly not someone with the profile that Amazon has these days. If they've been transacting business in every city and county in this nation for years without the appropriate license, why haven't they been hammered out of business yet for these violations? I would be shutdown in pretty short order if I tried it. I am guessing it is because they aren't transacting business in every location that a purchaser lives in.