New York Times editorial rips Amazon.com over sales ‘tax dodge’

[Follow-up: Amazon.com reaches truce in California sales tax battle ]

Amazon.com is pushing hard (and funneling a lot of money) into an effort to repeal a California law that forces online retailers to collect sales taxes on purchases made in the state. The Seattle company also is taking some heat for an offers to put thousands of jobs in the state if politicians repeal the tax. Simultaneously, Amazon is reportedly close to getting enough signatures from California citizens to put a referendum on the ballot that would ask voters to repeal the tax collection law.

Now, The New York Times is weighing in on the issue, noting in an editorial titled “Amazon’s Tax Dodge” that the company’s “no-holds-barred fight” in California is “an abdication of corporate responsibility.”

Amazon collects sales tax in Washington state and four other states where it has physical operations. But, as The New York Times points out, the online retailer has avoided taxes in some states like California by setting up subsidiaries. The company maintains that those operations — even though in many cases they are providing critical services for the company — do not constitute a physical presence. (For example, much of the work of Amazon’s Kindle device is handled by an entity known as Lab126, which is based in Cupertino, California).

Because of that and the desperate need of funds in California, The New York Times writes that the state should “not back down on its proper demand that Amazon collect taxes that are owed.”

Previously on GeekWire: California politicians look to put brakes on Amazon tax referendum

[Follow-up: Amazon.com reaches truce in California sales tax battle ]

  • http://blog.wingtangwong.com/ Wing Wong

    Food for thought: private companies generally suck at policing themselves or their own industries because their primary goal is not the welfare or benefit of the people, but of themselves and their shareholders.

    • goul of whar

      Wow. Your reply was so filled with obvious truths and mindless drivel and so totally irrelevant that it rendered its own self less than worthless. You might as well have jumped off a bus wearing a bicycle helmet and a drool-guard proclaiming such drivel as “I like peanut butter and jelly soup!!” and “I have fuzz in my belly button!!” as that has about as much to do with this article as your original reply.

  • Jsprenkle

    Mail order companies have always been exempt from collecting sales tax. This is nothing more than a grab for money by politicians.

  • Jsprenkle

    Mail order companies have always been exempt from collecting sales tax. This is nothing more than a grab for money by politicians.

  • Justin Barth

    Wouldn’t Lab126 be paying taxes in California already. So it looks like California wants to double tax as much as they can get away with. I think Amazon was fighting the good fight!

  • Mrchips

    Absolute garbage!  I live in Calif***ya, and can pleasantly state that individuals are supposed to document anything they purchased from out of state and pay ‘use tax’ on it.  Let’s allow the politicians to spin their wheels auditing everyone’s return to see if they did it or not vs. force a company that already stores too much personal information to also collect a fee..

  • Mrchips

    Absolute garbage!  I live in Calif***ya, and can pleasantly state that individuals are supposed to document anything they purchased from out of state and pay ‘use tax’ on it.  Let’s allow the politicians to spin their wheels auditing everyone’s return to see if they did it or not vs. force a company that already stores too much personal information to also collect a fee..

  • Mrchips

    Absolute garbage!  I live in Calif***ya, and can pleasantly state that individuals are supposed to document anything they purchased from out of state and pay ‘use tax’ on it.  Let’s allow the politicians to spin their wheels auditing everyone’s return to see if they did it or not vs. force a company that already stores too much personal information to also collect a fee..

  • Steve_jobs

    Jsprenkle….you obviously do not understand the law.  Mail order companies are only exempt from collecting tax in states where they have no presence.  So, it’s not a “money grab.”  Try to read the article and focus on understanding before you comment.

    • Thaylin

      The law is that states can not make laws to interfere with interstate commerce. The physical presence here means a brick and mortar store, not a subsidy. The thought behind it is if best buy has a store already collecting sales tax then they already have the system in place for their online systems as well….

      This is just a money grab, as subsidies does not make sense, as they are typically independent in almost every way.

    • Thaylin

      The law is that states can not make laws to interfere with interstate commerce. The physical presence here means a brick and mortar store, not a subsidy. The thought behind it is if best buy has a store already collecting sales tax then they already have the system in place for their online systems as well….

      This is just a money grab, as subsidies does not make sense, as they are typically independent in almost every way.

  • http://twitter.com/Blainee Blaine Elliott

    Steve_jobs, this is indeed a money grab.  It’s a tax on affiliate commissions that affects affiliates.  Amazon indirectly stands to lose business when California affiliates of Amazon stop working with Amazon.  I don’t blame you on not understanding, the NYT & geekwire both doing a poor job of explaining the problem.  Here’s more background http://searchenginewatch.com/article/2083119/California-Affiliate-Tax-Becomes-Law

    • Dr. Faustus

      So the giant warehouses in Reno, Chapel Hill, etc. that actually store and deliver the books doesn’t count as a physical presence? Of course not… officially, these are totally separate companies, completely unconnected from Amazon. It is purely coincidence they have only one customer.

      Companies pull this kind of dodge all the time. I recall one company that required time cards be sent to the office on the east coast, and paychecks came out of the west coast office. No matter where you were in the country, everybody had to wait exactly the same amount of time for the documents to make two complete traversals of the continental US: You->East Coast->West Coast->You.

      This kind of jiggery-pokery is just dishonest, and Amazon should stop. It’s just embarrassing to watch.

    • Dr. Faustus

      So the giant warehouses in Reno, Chapel Hill, etc. that actually store and deliver the books doesn’t count as a physical presence? Of course not… officially, these are totally separate companies, completely unconnected from Amazon. It is purely coincidence they have only one customer.

      Companies pull this kind of dodge all the time. I recall one company that required time cards be sent to the office on the east coast, and paychecks came out of the west coast office. No matter where you were in the country, everybody had to wait exactly the same amount of time for the documents to make two complete traversals of the continental US: You->East Coast->West Coast->You.

      This kind of jiggery-pokery is just dishonest, and Amazon should stop. It’s just embarrassing to watch.

  • http://twitter.com/Blainee Blaine Elliott

    Steve_jobs, this is indeed a money grab.  It’s a tax on affiliate commissions that affects affiliates.  Amazon indirectly stands to lose business when California affiliates of Amazon stop working with Amazon.  I don’t blame you on not understanding, the NYT & geekwire both doing a poor job of explaining the problem.  Here’s more background http://searchenginewatch.com/article/2083119/California-Affiliate-Tax-Becomes-Law

  • Joe Celko

    People mght want to read the history of the “Sears & Roebuck Mail-Order Catalogue” (proto on-line shoppuing) or the history of Player Piano rolls (proto iPod). Thethe nature of  technology changes, but the nature of government does not.

  • Zontar

    I would suggest that critics of Amazon read one of the state “nexus” laws. I recommend the Texas nexus law, because it is so extreme. States now are telling companies that they have a nexus with the state if an employee so much as flies over it in an airplane. Amazon can deal with this crap, but small businesses really get sucker punched into wasting a lot of resources dealing with it. I’m rooting for Amazon in their quest to get this stuff into a federal level law that will liberate small businesses from having to fill out tax forms for a dozen states.

    • Joe Celko

      It is not just having to track a dozen States; it having to track all the local taxes and laws inside the States. Califonia alone has over 1400 different local taxes. In the Southern states, food & alcohol is often a county option, Georgia has no Sales tax on Bibles, some place tax food, some do not, etc.

  • Libra4687

    I think it is time that all states started collecting sales tax through internet retailers.  After all, we pay tax at brick and mortar retailers. Why not online as well? We need the tax dollars.  I hate taxes just as much as the next person, but I also hate watching schools and hospitals face budget cuts.

    However, I realize it gets hairy for companies like Amazon because every state has different sales tax rates and laws.  I believe the federal government should step in and require every state to collect the same amount of taxes from online retailers. This is probably illegal or unconstitutional, but I believe it would be the easiest and most fair way to collect tax.

    As Amazon and the states fight one another over tax dollars, affiliate marketers are the ones really getting hurt.  More than 2,500 people just lost a source of income in California. Many website owners use affiliate marketing as a way to just earn a few extra hundred dollars a month, and it is by no means “easy money.”  Building a successful website takes months, even years.  Why should they lose everything they’ve built?  Why should people in say, Iowa, be able to make money with affiliate marketing while people in California or Illinois are not allowed to?