California starts taxing the internet!

  • Posted by a hidden member.
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    Jul 01, 2011 2:43 AM GMT
    But not without consequences!

    http://www.latimes.com/business/la-fi-amazon-tax-20110630,0,4344787.story
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    Jul 01, 2011 3:32 AM GMT
    Good policy. Amazon should stop whining and start collecting. icon_rolleyes.gif
  • Posted by a hidden member.
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    Jul 01, 2011 3:44 AM GMT
    California is stupid. Let them tax themselves to hell if they want. Businesses are moving out of there. Texas and Idaho are the new economic hotspots.

    There is also a high level of bullshit going on here. The one idiot (Dombrowski) said that Amazon has a competitive edge over B&N, WalMart, Best Buy, et al.

    Nonsense. Those retailers also have an online presence (clicks n' mortar). You can order anything from those stores via their websites.
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    Jul 01, 2011 3:45 AM GMT
    MuchMoreThanMuscle saidThis will hurt a lot of online companies. Part of the draw to shop with many online retailers is not having to pay taxes. Last major purchase I made was a 52" television years ago. Since I spent quite a bit of money I got free shipping. If I were to pay taxes on it I would not bother and just buy the same thing in the city. I saved myself well over $100 by buying online. I like saving money.


    Dude, do you realize that by seeking to save money you are killing old people and children, and destroying the rain forest, and denying women their rights, and causing childhood obesity, and making the French hopping mad???
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    Jul 01, 2011 3:55 AM GMT
    Of course, the goal is to get congress to enact a nationwide tax. I think restraint of trade issues will arise, due to the interstate nature of the commerce.

    But it still remains true that companies are fleeing California - this is just one more incentive for them to leave.

    Damn, I may just move to Boise.
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    Jul 01, 2011 4:01 AM GMT
    Yep. And people get pissy when companies "locate" in the Caymans or some other such tax haven.

    It's common sense. Even the progressive, enlightened Kennedys have their trust funds parked all over the world to avoid IRS meddling.
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    Jul 01, 2011 4:46 AM GMT
    It's just another breach of the constitution, another nail
    In the coffin.
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    Jul 01, 2011 11:00 AM GMT
    I have mixed feelings about this. For one thing, it's not really news as many online retailers have to collect state sales tax in many states already. For another, if one buys something online which one would have to pay sales tax if it was bought in a shop, then in most states one *ought* to report and pay the tax due as "Use tax". If you don't do this—and almost noone does—then you are in fact guilty of tax evasion.

    It's absolutely clear that sales tax evasion has been a strong competitive advantage for online retailers, and in many ways an unfair one. I'm not surprised that states are trying to tighten this up.

    I must admit, I miss the days when the web was free from government and people without PhDs. It was so much more interesting then.

  • creature

    Posts: 5197

    Jul 01, 2011 1:24 PM GMT
    I do affiliate marketing on the side and I know this is going to impact a lot of people.

    When Illinois did this, Amazon notified its affiliates who reside in that state that they are being dropped as Affiliates because of tax collection. As a result, some incorporated themselves as a Delaware or Nevada business to maintain their affiliate status.

    With so many people in California, those who rely on Amazon's commission program are going to be shaken up and missing out on the few hundred or thousand dollars they pick up.
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    Jul 01, 2011 2:02 PM GMT
    creature saidI do affiliate marketing on the side and I know this is going to impact a lot of people.

    When Illinois did this, Amazon notified its affiliates who reside in that state that they are being dropped as Affiliates because of tax collection. As a result, some incorporated themselves as a Delaware or Nevada business to maintain their affiliate status.

    With so many people in California, those who rely on Amazon's commission program are going to be shaken up and missing out on the few hundred or thousand dollars they pick up.


    So are you for or against this? After all, continuously finding more things to tax and progressively tax more IS the liberal way so I'm assuming you are in favor.

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    Jul 01, 2011 2:15 PM GMT
    Well this is quite frankly rather kooky.

    "That's because the new requirement applies only to online sellers based out of state that have some connection to California, such as workers, warehouses or offices here."

    Up here if I buy anything on the internet, no matter where the company is and no matter whether the company has any presence in BC or not, or even in Canada, the taxes are based on the purchaser's location.
    If I place my order from a PC in Alberta where there is no sales tax, then there is no sales tax.
    If I order from BC I must pay 12% courtesy of our Conservative federal government taking over our Provincial (state) sales tax, combining it with their federal sales tax and applying it to things the Provincial sales tax never was applied to before.

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    Jul 01, 2011 2:18 PM GMT
    Apparently this does not apply to all internet retailers outside of California...

    One paragraph stated:

    "That's because the new requirement applies only to online sellers based out of state that have some connection to California, such as workers, warehouses or offices here."

    So, for internet retailers shipping to California customers that do not have a connection will not have to pay the tax. I think the politicians were smart enough to realize it would be almost impossible to enforce.

    I have a retail site and have many customers in California. The tax will not apply to me since I have no connection to the state. But... if they tried to make me pay the tax, I don't think they could enforce it.
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    Jul 01, 2011 2:25 PM GMT


    Here's an example of how it works up here. If I order books from Lulu.com in NC, they collect 12% and remit it to the Canadian gov't because I live in BC Canada.

    If I drive to Alberta where there is no sales tax and order books from lulu.com from there, then Lulu.com collects no sales taxes for the Canadian gov't.

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    Jul 01, 2011 3:03 PM GMT
    Shows how ass backwards CA is and how desperate they are to not take on the teachers and public service unions. They would rather put people out of work than take them on. CA has 12% reported unemployment and over 30% of the nations welfare recipients. The democrats just added to it. well done.
  • creature

    Posts: 5197

    Jul 01, 2011 3:11 PM GMT
    mocktwinkie said
    creature saidI do affiliate marketing on the side and I know this is going to impact a lot of people.

    When Illinois did this, Amazon notified its affiliates who reside in that state that they are being dropped as Affiliates because of tax collection. As a result, some incorporated themselves as a Delaware or Nevada business to maintain their affiliate status.

    With so many people in California, those who rely on Amazon's commission program are going to be shaken up and missing out on the few hundred or thousand dollars they pick up.


    So are you for or against this? After all, continuously finding more things to tax and progressively tax more IS the liberal way so I'm assuming you are in favor.



    I don't mind online retailers charging a tax. After all, I'm used to items that I purchase being taxed at a local brick and mortar.

    Not getting charged tax has never been my reason for shopping online. It's because of the selection offered, prices, and possibly free shipping.

    I do feel bad for the affiliates that will be dropped as a result. But that's Amazon's decision.
  • creature

    Posts: 5197

    Jul 01, 2011 3:17 PM GMT
    I just checked the other forum, here is the e-mail Amazon is sending out to their California affiliates:

    Hello,

    Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

    You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.



    To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.



    We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.



    Regards,
    The Amazon Associates Team





    This is the one they sent out before the bill was signed into law

    Hello,

    For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.


    We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.


    As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.


    You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.


    To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.


    We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.


    Regards,
    The Amazon Associates Team
  • Menergy_1

    Posts: 737

    Jul 01, 2011 3:19 PM GMT
    I may not be getting the "new" point here - I don't know what the furor is all about. I have paid sales taxes on on-line purchases from companies who have on-the-ground stores in my state (New Mexico now, California before) and I would have to pay sales tax in the store were I to walk in and purchase it.--

    Sure, there are plenty of purchases I make from sources with no store presence, and I don't get charged sales taxes online from them. I had thought there was already a requirement to add sales tax onto internet purchases when there is a store in the state I'm in and ordering from (just like meninlove's examples in Canada).

    Considering the many states' economic woes, I imagine the state sales tax rules to broaden to close this disparity about sales taxes....

    Yes, it's good to save money - and it won't be the deal breaker for me in continuing to purchase on-line or not.
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    Jul 01, 2011 3:32 PM GMT
    Menergy_1 saidI may not be getting the "new" point here - I don't know what the furor is all about. I have paid sales taxes on on-line purchases from companies who have on-the-ground stores in my state (New Mexico now, California before) and I would have to pay sales tax in the store were I to walk in and purchase it.--

    Sure, there are plenty of purchases I make from sources with no store presence, and I don't get charged sales taxes online from them. I had thought there was already a requirement to add sales tax onto internet purchases when there is a store in the state I'm in and ordering from (just like meninlove's examples in Canada).

    Considering the many states' economic woes, I imagine the state sales tax rules to broaden to close this disparity about sales taxes....

    Yes, it's good to save money - and it won't be the deal breaker for me in continuing to purchase on-line or not.


    for me it just means that I would not buy from an affiliate in CA. My money will to out of state. The affiliate in CA will either just go out of business or manage.

    Like you said, considering many states financial woes, this is probably not the best time to intentionally put people out of work.
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    Jul 01, 2011 3:38 PM GMT


    Not long ago on another topic many conservatives were touting sales taxes replacing income taxes. Logically, if this were to happen and no sales taxes were charged on online purchases, all brick and mortar stores would close, and there would be little or no sales tax revenue which would mean income taxes would have to applied, as your govts cannot operate on thin air. How would the politicians of all stripes get paid?

    That said, I think the California method is clumsy and punitive to online businesses that have a presence in CA.

    It will drive bricks and mortar stores in CA to close and move to another State and then magically this California tax collection by businesses from purchasers will not be applied.

    Weird.

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    Jul 01, 2011 3:49 PM GMT
    mocktwinkie said
    creature saidI do affiliate marketing on the side and I know this is going to impact a lot of people.

    When Illinois did this, Amazon notified its affiliates who reside in that state that they are being dropped as Affiliates because of tax collection. As a result, some incorporated themselves as a Delaware or Nevada business to maintain their affiliate status.

    With so many people in California, those who rely on Amazon's commission program are going to be shaken up and missing out on the few hundred or thousand dollars they pick up.


    So are you for or against this? After all, continuously finding more things to tax and progressively tax more IS the liberal way so I'm assuming you are in favor.



    -------------------------------------------------

    Hey Mock !! go easy on us liberal leaning guys !! I for one am all for leaving the net as is. But I suspect that states will be eager to get on board this new way of bringing in Millions. Guess we'll just have to 'submit' to it eventually.
  • austex85

    Posts: 572

    Jul 01, 2011 3:56 PM GMT
    solution: every state enact similar legislation so there will no longer be a competitive advantage. this is a consumption based tax, so traditionally "red" states are just as likely to enact something like this.
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    Jul 01, 2011 3:58 PM GMT
    austex85 saidsolution: every state enact similar legislation so there will no longer be a competitive advantage. this is a consumption based tax, so traditionally "red" states are just as likely to enact something like this.


    Exactly.
  • NerdLifter

    Posts: 1509

    Jul 01, 2011 4:00 PM GMT
    Where are people getting "unconstitutional" from? Did any of you actually go to law school, or take at least a few business law classes? I like Amazon and sales free taxes online... but one of the first things we learned about sales tax in class is that most states have chosen not to enforce tax collections from online transactions; they were already subject to them in the first place. Now that most states are in a major cash bind, they are actually looking towards collecting them for the first time.

    Online and offline, same laws apply. I knew for years that this was coming as it has been talked about before among state legislatures and legal councils. Now that it's getting mainstream media attention, all of sudden people are spouting nonsense.

    To reiterate, they never had a right to no sale's tax, they were in fact subject to ALL traditional sales taxes. State's felt like it was too much of a bother in the past to try to track those transactions, but now they want what is rightfully the state's. This is nothing new. Because something happens online, it doesn't magically get a completely different set of laws applied.



    Now personally... I'm going to miss my tax free lube shipments icon_sad.gif
  • creature

    Posts: 5197

    Jul 01, 2011 4:05 PM GMT
    Just an update:

    This does not effect all online businesses. Only those who sell $500,000 or more in physical products to California residents. So smaller online retail businesses are not impacted. This targets bigger companies like Amazon.

    Wanting to collect taxes for online sales is not a liberal/blue state thing:

    http://blogs.forbes.com/janetnovack/2011/04/29/has-amazon-lost-the-south-and-tea-party-in-internet-tax-war/

    Don't be so quick to jump the gun.
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    Jul 01, 2011 4:27 PM GMT
    MuchMoreThanMuscle saidThis will hurt a lot of online companies. Part of the draw to shop with many online retailers is not having to pay taxes. Last major purchase I made was a 52" television years ago. Since I spent quite a bit of money I got free shipping. If I were to pay taxes on it I would not bother and just buy the same thing in the city. I saved myself well over $100 by buying online. I like saving money.


    http://tax.illinois.gov/Individuals/Illinois-Use-Tax.htm

    Yeah, just FYI, you are supposed to report and pay that tax on your Illinois return. The use tax law has existed and been mostly ignored, but IL gov claims to be trying to enforce it better now that online shopping is pretty common. I prepared returns this year and a lot of people did report use tax for 2010.

    Additionally, if you buy something in a state with a lower sales tax than Illinois, say 5% on general merchandise, you're supposed to pay the difference between the tax rates, so 6.25%-5% = 1.25% on your IL return. This part is a pain to keep track of and is still largely ignored.