New York, Rhode Island, and North Carolina have enacted laws forcing retailers to collect state sales taxes on internet purchases. These new laws are here just in time for the holidays!
States are trying to boost tax revenues which have been on a steady and often rapid decline. These so called “Amazon Laws” are having interesting, and controversial, effects.
Amazon.com, for example, has pulled out of North Carolina as it ended partnerships with scores of small business entrepreneurs in the state. Amazon maintains that the new sales tax laws are unconstitutional.
The NC legislature, on the other hand, argued that, in addition to providing new tax revenue, the measure will level the playing field for all retailers whether they are online entrepreneurs or bricks-and-mortar businesses. Many North Carolina small store owners, including many book stores that compete with Amazon, are thrilled with the new legislation.
Amazon is challenging New York laws and is continuing its fight in California as that state threatens to tax online sales beginning sometime in 2010. Amazon maintains it will end its relationships with its associates in that state as well.
The Supreme Court has ruled that only companies with a “physical presence”, usually a store or warehouse, in the same state as the customer should charge tax for purchases. North Carolina, for one, is treating websites hosted in the state that share profits when customers click-through as the legal equivalent of physical presence.
Brick-and-mortar retailers complain about being forced to compete with online retailers on a playing field that is not level. On-line retailers complain that they don’t have a vote in these states where they’re not based and that it’s unfair for laws to be implemented against them when they are allowed no voice in the decision making process.
Will taxation slow down your online buying? I happen to buy because it’s convenient, not necessarily cheaper. I simply don’t have the time or desire to run around shopping.
What do you think?
