Amazon to collect sales tax nationwide starting April 1st | Hacker News Reader

Amazon to collect sales tax nationwide starting April 1st

cnbc.com

74 pointsUrgo40 comments

It's incredible how things like collecting sales tax is up for discussion with some US states. If you don't collect VAT anywhere in Europe you get severely punished by authorities. They take their 20% cut from every sale very seriously.

It's .. complicated. It's not so much whether tax should be collected, it's where and who by.

I can only speak for Michigan, the only state I've lived in, but it goes something like;

* Tax on interstate purchases (where the buyer and vendor are physically in different states) is owed in the state the buyer is physically in.

* Tax is not (was not?) collected at the point of sale.

* Buyer should declare (significant?) purchases on their (state) tax returns.

So the theory is that if I go into a shop and purchase something for $100, I pay $106 at the point of sale. If I purchase the same item from an out-of-state vendor online, I pay $100 at the point of sale, and owe the outstanding $6 on my state taxes.

As you can imagine, this is near-impossible to audit (hands up anyone who's ever declared those purchases?). There's been resistance to change nominally because taxes are very difficult to calculate (the same purchase can be covered by state, county and municipal taxes - it's not just a list of 50 numbers), but realistically because online vendors have enjoyed making it Someone Else's problem, with the lower prices also working in their favour (on significant, 4-digit purchases, whether the vendor had a presence in Michigan would factor into which vendor I chose).

> this is near-impossible to audit

This is only hard to audit because the Michigan tax authorities are criminally incompetent (or just criminal full stop).

Subpoena Amazon (and jet.com, ebuyer, newegg) sales delivered to Michigan addresses, compare address list with the list of addresses that self-declared sales tax for out-of-state purchases, send automatic back tax and penalty notice to all all addresses which didn't. None of these steps are hard, it will increase compliance millionfold and bring it hundreds of millions in revenue.

My understanding of why this is all so tricky.. the Constitution specially gives only the federal govetnment the right to regulate interstate commerce. So Michigan could not force the records from Amazon, the federal government would need to.

Just subpoena it? Under what authority? Amazon is WA based. Unless there is some sort of physical Nexus in MI, how do you enforce a subpoena? MI state police can't show up at Amazon headquarters and start siezing assets, it doesn't work that way. It's not Amazon's problem that it's customers aren't following state law. And MI has no authority to require an outside company to comply any more than they could force Alibaba to collect MI state sales tax.

Note that I don't know if Amazon has facilities in MI or not, but there are plenty of states where they dont.

It's very difficult to do right. The amount to collect, for many states, is different for each city, and sometimes even different rates within a single city.

Similar issues with remitting the collected tax.

The government is only now somewhat serious about it for e-commerce because it's finally possible, because of complex software, to do it mostly right.

Well part of that is that in the United States every single state and multiple municipalities set their own rules for taxation. It is quite burdensome for an online retailer to comply with this (whereas a brick-and-mortar retailer generally only has to worry about the one set of rules for where it is located). In fact, one reason Amazon may have changed its mind about whether it should be mandated that online retailers collect sales tax is that the complexity of doing so may keep new competitors without Amazon's vast resources out of the market.

It's complicated but it's been solved already. There are already services that keep the tax tables up to date and issue the funds to the respective districts for a small fee. Amazon will use one of these services like everyone else will.

So crush the competition by being able to underprice for years by not paying sales tax, then once you've won, get credit for being a good corporate citizen by playing nice again.

State sales tax is a pain in the ass. I do some work for a place that only has a physical presence in the state of Washington, so collects sales tax for online sales to Washington residents.

Online sales tax in Washington is based on the buyer's location, not the seller's location. There are currently 25 different sales tax rates in effect here. So for each sale to a Washington resident we have to determine which of those 25 rates applies.

5 digit zip code is not sufficient to determine the tax rate for a location. A given zip code region can overlap different tax regions that have different rates. There is one zip code that includes 5 different sales tax rates, and several that include 4. A zip+4 code is sufficient, but (1) many people do not know their zip+4, and (2) I don't think there is any guarantee that a zip+4 won't cross a tax region boundary.

The way you are supposed to handle this is to determine the rate based on the street address. You can download from a Washington state government website[1] 39 files (one per county) that contain lists of streets and address ranges and tell which tax location each falls under. A typical record from one of these files looks like this:

  100,198,E,CASECO LN,WA,98366,4700,Q22017,1802,N,Kitsap PTBA,

That particular record says that it covers addresses in the range [100, 198], on the even address side of the street named "Caseco LN", in the state of WA, and those addresses have zip code 98366-4700, the record is valid for quarter 2 of 2017, the location code is 1802, those addresses have Regional Sound Transit indicator N, and in the Kitsap PTBA (Public Transit Benefit Area). The empty field on the end is the name of the Community Empowerment Zone. The important part for tax purposes is the location code (1802), for those are the codes that identify tax regions.

If you use that you've got to deal with all the different ways people might write their street address. For instance, if there is a "Martin Luther King Blvd", you will find people who write it as "MLK Blvd", and probably some who write it as "MLKing Blvd", and some who will suffix it with "St" or "Ave" instead of "Blvd".

What we do is simplify this a bit, and just go by 5 digit zip code. The rate we collect is the rate of the highest rate location that overlaps that zip code. That way we are sure to never under collect (and more importantly, never under pay to the state).

Our only physical presence is in Washington, so we only have to do this for Washington. I cannot imagine how painful it would be if we had to do this for several states, let alone if we had to do it for 50 states.

[1] http://dor.wa.gov/content/FindTaxesAndRates/SalesAndUseTaxRa...

This exactly is why I am glad the US Constitution forbids states from charging interstate taxes, and why I oppose all of the efforts by congress to allow states to collect interstate sales taxes.

My State 1 tax, for the entire state, and outside an few industry specific taxes (hotels, rental cars ) there is only 1 sales tax to collect. We do not have sales taxes at the city or county level those are forbidden at the state level.

makes it so much simpler

The address stuff gets a lot easier if you use smarty streets.

This doesn't say if they will collect taxes for Merchant fulfilled orders, and I suspect by default they still won't. Their current process for collecting taxes requires the merchant to fill out a long detailed form of all the state and local taxes for everywhere you want to collect tax. It's ridiculous because they already know this information and are just making it difficult so less merchant's collect taxes. Last time I tried if you saved the form when not 100% complete it would silently delete all your work, so good luck if you need to look up a single thing and come back to it.

I'm always suspicious of things happening on April 1st.

Regarding Amazon collecting taxes, they started doing it in my state earlier this year, and I've found that I hardly buy anything from Amazon anymore.

Amazon has a subtle sense of humor.

Where do you buy from instead?

>I'm always suspicious of things happening on April 1st.

It's not like that is the first day of a new fiscal quarter...

And for those who remember that far back, Gmail was launched on the 1st of April.

Apple was started on April 1, 1976.

A lot of fake news is propagated on April 1st each year, particularly in the tech industry, so there is justifiable reason to view April 1st announcements with a bit of skepticism.

I take it you were evading use tax before; or were your purchases really so small/infrequent as not to be subject to use tax in your state? Did you even check?

In Massachusetts it doesn't matter how small it is; you're still subject to the use tax. Of course it's practically impossible to verify and very few people even have accurate records.

So are you saying that you log all of your online purchases, filtering out those that already witholdings tax and remit use tax? Because for me, the burden of keeping track of that would be rather high.

I guess you were illegally leaving all the use tax off your tax returns then.

So you either don't buy much online, buy only from one place (that can provide a nice end of year report), or hire a bookkeeper to keep track of it, because the burden of calculating use tax otherwise would be extremely high.

Absolutely! If my state isn't going to come after me for use tax, which they don't, I'm not paying it. I don't believe it is just for the government to steal the rewards of my labor at every turn, so I protest excessive taxation in any way I can.

If you want to roll over and let the government pillage the rewards of your labor in every conceivable way, both coming and going, that is your prerogative; however, it is not one I share.

I expect that Amazon will now start lobbying for a federal law to enforce this on all retailers, as I have shifted a lot of dollars from Amazon to B&H because Amazon now collects CA tax.

TL;DR: "Tax-free shopping will be over as of next month in Hawaii, Idaho, Maine and New Mexico, the four remaining holdouts."

Thank you. I'd love a TL;DR for every news article please ;)

... it's literally the second sentence of the article.

We detached this subthread from https://news.ycombinator.com/item?id=13953907 and marked it off-topic.

Thanks

April fools?

Lol: "Amazon's decision to collect and remit sales tax to the state of Maine is an important first step in leveling the playing field,"

Why? This came across as quite reasonable.

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