February 23, 2011

Leading Texas newspaper calls for Amazon to pay its taxes

by Dennis Johnson

Another big city newspaper has blasted Amazon.com for dodging paying sales taxes in Texas — this one in Texas. As MobyLives noted earlier, Amazon’s hometown newspaper, the Seattle Times, recently took the company to task for firing its employees and abandoning its business in Texas to avoid paying sales taxes on books sold there.

Now, the editors of the Dallas Morning News have joined in with a ringing editorial, saying “It defies logic that a book bought online can elude sales tax while the same book bought in a bookstore can’t. A sales transaction is a sales transaction, and if one is taxed, why shouldn’t the other be taxed as well?”

The paper’s declaration comes shortly after Texas Governor Rick Perry criticized Texas Comptroller Susan Combs for demanding that Amazon pay the state $269 million dollars it owes in back taxes.

But the DM editors praise Combs for not backing down, and say she “is right to try to collect sales tax from Amazon and protect brick-and-mortar stores in Texas from unfair competition.”

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.

4 Comments

Anonymous at 1:45 pm on February 23, 2011

It is puzzling why similar action is not being pursued by the California State Board of Equalization considering Amazon.com has had its Kindle R&D development subsidiary, Lab126, operating in Cupertino since 2004.

It is worth noting that in Texas, the authorities where unaware about Amazon operating its distribution center in Irving,TX for 4 years until a vigilant reporter from the Dallas Morning News brought it to their attention.

Remote online merchants like Amazon.com have been exploiting our byzantine sales tax regulations by employing permissive “Entity Isolation” legal voodoo to get around the “Nexus” issue & cynically dodge collection of sales taxes and this has been posing an unfair competitive handicap to main street retail for years. Plugging such corrupting loopholes will foster a business ecosystem of free, fair and level playing field to flourish, bring back jobs and vibrancy to main street retail and much needed revenues to the state.

The proper venue where this should be addressed is Washington by resurrecting the “Sales Tax Fairness and Simplification Act,” H.R. 3396 which had bi-partisan sponsors but died in committee in the last congress. But this act gives the force of law only to states which enacted the “Streamlined Sales Tax Agreement” which 24 states have so far passed. But Texas hasn’t yet. So, state legislators should focus on this step first.

Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.

An outfit called Alliance for Main Street Fairness (StandWithMainStreet.com) has been formed recently to lobby to end the present online sales tax loophole.

This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:

A dog is lying on the porch whining softly.
A passerby asks the owner what is wrong with the dog.
“thar’s a nail stickin’ up outta da porch tha’ he’s laying on.”
“Why doesn’t he move?”
“Donno. I reckon it don’ hurt bad enough.”
Anonymous at 1:45 pm on February 23, 2011

It is puzzling why similar action is not being pursued by the California State Board of Equalization considering Amazon.com has had its Kindle R&D development subsidiary, Lab126, operating in Cupertino since 2004.

It is worth noting that in Texas, the authorities where unaware about Amazon operating its distribution center in Irving,TX for 4 years until a vigilant reporter from the Dallas Morning News brought it to their attention.

Remote online merchants like Amazon.com have been exploiting our byzantine sales tax regulations by employing permissive “Entity Isolation” legal voodoo to get around the â€œNexusâ€ issue & cynically dodge collection of sales taxes and this has been posing an unfair competitive handicap to main street retail for years. Plugging such corrupting loopholes will foster a business ecosystem of free, fair and level playing field to flourish, bring back jobs and vibrancy to main street retail and much needed revenues to the state.

The proper venue where this should be addressed is Washington by resurrecting the â€œSales Tax Fairness and Simplification Act,â€ H.R. 3396 which had bi-partisan sponsors but died in committee in the last congress. But this act gives the force of law only to states which enacted the â€œStreamlined Sales Tax Agreementâ€ which 24 states have so far passed. But Texas hasnâ€™t yet. So, state legislators should focus on this step first.

Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.

An outfit called Alliance for Main Street Fairness (StandWithMainStreet.com) has been formed recently to lobby to end the present online sales tax loophole.

This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:

A dog is lying on the porch whining softly.
A passerby asks the owner what is wrong with the dog.
“tharâ€™s a nail stickinâ€™ up outta da porch thaâ€™ heâ€™s laying on.â€
“Why doesn’t he move?”
â€œDonno. I reckon it donâ€™ hurt bad enough.â€
Anonymous at 9:47 pm on February 23, 2011

Consumers who live in a state that has sales tax, like Texas, are responsible for paying the tax on purchases from out of state sellers. Understandably though, many consumers don’t keep track of every purchase and report them. It makes more sense for the seller to collect the tax, just as a bricks-and-mortar store does.
The Streamlined Sales and Use Tax Agreement, which 24 states have signed, has dramatically reduced the complexity of calculating and collecting local sales tax. As part of the Streamlined Agreement, states have certified several companies to provide technology solutions to online merchants to make collecting sales tax easy. My company, FedTax.net (based in Seattle) offers a service, called TaxCloud, that automatically calculates accurate local sales tax. The service is completely free to merchants.
The Main Street Fairness Act, which was introduced in Congress last year but not voted on, would give every state the right to require out-of-state merchants to collect local sales tax, ensuring that local businesses do not have to continue competing over price with
internet-only retailers that are escaping their obligation to collect sales tax.
Anonymous at 9:47 pm on February 23, 2011

Consumers who live in a state that has sales tax, like Texas, are responsible for paying the tax on purchases from out of state sellers. Understandably though, many consumers don’t keep track of every purchase and report them. It makes more sense for the seller to collect the tax, just as a bricks-and-mortar store does.
The Streamlined Sales and Use Tax Agreement, which 24 states have signed, has dramatically reduced the complexity of calculating and collecting local sales tax. As part of the Streamlined Agreement, states have certified several companies to provide technology solutions to online merchants to make collecting sales tax easy. My company, FedTax.net (based in Seattle) offers a service, called TaxCloud, that automatically calculates accurate local sales tax. The service is completely free to merchants.
The Main Street Fairness Act, which was introduced in Congress last year but not voted on, would give every state the right to require out-of-state merchants to collect local sales tax, ensuring that local businesses do not have to continue competing over price with
internet-only retailers that are escaping their obligation to collect sales tax.