CNBC Lie on Amazon and Sales Taxes
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2018-04-16 11:58 by Karl Denninger
in Company Specific , 146 references Ignore this thread
CNBC Lie on Amazon and Sales Taxes
[Comments enabled]

They're claiming that it's a "loophole" with regard to Amazon's so-called "third party" sellers.

There are no actual third-party sellers on Amazon.

Amazon is not a mere advertising conduit; they in fact handle fully half the transaction in that they take the money, withhold their commission and transmit the money to the 'seller' along with being the "decider" in any dispute.

They thus have nexus for the simple fact that Amazon is exactly like a company that has a product 'drop shipped' from some supplier in another state.

During MCSNet's first incantation (as a custom PC hardware and software development house) we occasionally had someone order something we didn't have in stock but had an established line on and knew where to get it from.  We would and did have that product drop shipped to the customer, but they paid us (and then we paid the supplier) and in every case where the customer was in Illinois we charged and remitted sales tax because we had nexus.  This is exactly Amazon's "third-party" business model; they quote a price, they take the money, they pass the part of it (less their commission) to the supplier and they tell the supplier where to ship the product.

The sale from the perspective of the buyer is from Amazon and they pay Amazon.  If there is a problem with the product or delivery thereof it's Amazon's problem and if the customer charges back the transaction from their credit card company Amazon is the one that gets the chargeback.

There is no new law or new Supreme Court decision required.  This is settled law; the only reason Beelzebezos has run this crap is his firm's size and their sheer bludgeoning of both state and local governments with so-called "employment" promises made to same.

Lock that son-of-a-bitch up and shut his scam down.

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Aztrader
Posts: 7961
Incept: 2007-09-10

Scottsdale, AZ
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When you look at the tax code regarding it you are an employee or independent contractor, the IRS takes this very seriously. So many employers try to show their employees as independent contractors in order to avoid the substantial costs including employment taxes for these folks. Amazon has taken this argument into the sales tax area and even though we aren't actual employees of Amazon, we still run everything about our store under their rules. They collect the money and mandate that sellers pay for returns. They police listing and handle complaints. They send the tracking info to the customer and basically control everything. They are not our employer, but we couldn't exist on their store without following their rules. I completely agree with Karl that they do have a nexus and should be collecting sales tax.
We had a couple of orders from WA this weekend and the orders do show them collecting sales tax in Washington state. Our sales to Florida, California, Ohio and NC collected no sales tax. As you can see in this link, they have Nexus in all these states.https://www1.avalara.com/trustfile/en/re....
Tickerguy
Posts: 152426
Incept: 2007-06-26
A True American Patriot!
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Oh they definitely have nexus in Florida as they have multiple facilities here.

They tried to run a scam on that for years too; they set up captive LLCs to actually own and operate their regional distribution/warehouse centers and claimed "no nexus." That scheme collapsed when states started threatening to sue their ass off -- with good cause.

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Winding it down.
Dtlgc
Posts: 1060
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Texas
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WA and PA forced Amazons hand, I hope the others will follow soon....

Something to Ponder - If you are an FBA (fulfilled by Amazon) seller you may have a nexus in every state Amazon moves your inventory into....this is a dicey one....
Tickerguy
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Actually all Amazon sellers, third party or not, have nexus in every state Amazon has a facility in, whether your inventory is there or not.

Yes, this means you've been ****ing the state and they can come after both Amazon and you.

IMHO if they hit you with a summons or subpoena and you try to quash it with the premise "no jurisdiction" you will FAIL.

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Winding it down.
Bodhi
Posts: 359
Incept: 2008-02-23

Georgia
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Quote:
Yes, this means you've been ****ing the state and they can come after both Amazon and you.


Just as well that Amazon canceled my seller account because I didn't do enough volume. They lost ALL my business after that maneuver.
Aztrader
Posts: 7961
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Scottsdale, AZ
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This is currently pending:
XRT Color on upcoming Supreme Court ruling regarding out of state collection of sales tax (45.28 +0.46)



The Supreme Court is hearing the case South Dakota vs Wayfair (W). The case is a challenge to 1992 Quill V North Dakota Supreme Court case reaffirming that a state could not require a business to collect sales tax unless the business is physically located in the state.
Justices Kennedy, Gorsuch & Thomas -- have said they would overturn the 1992 ruling, which would allow states to collect sales taxes on online purchases. In addition, Justice Ginsburg indicated she will vote to overturn.
Sotomayor & Alito, Kagan want Congress to act to overturn the ruling (meaning they will likely vote to keep the ruling in place).
Justice Roberts said 'the problem has peaked' but did not indicate which way he will vote.
Justice Breyer said there are good arguments on both sides.
The Trump Administration is supportive of overturning the ruling.
Final decision by the Supreme Court is expected in early June.

If the vote is overturned it will likely be negative for Wayfair (W), Overstock (OSTK), and possibly Amazon (AMZN) and Ebay (EBAY). If the ruling is affirmed, it will likely be positive for those stocks.
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