Posted on 01/06/2011 4:30:39 PM PST by mlizzy
Greetings from the Amazon Associates Program: We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates. You are receiving this email because our records indicate that you are a resident of Illinois. If our records are incorrect, you can manage the details of your Associates account here.
Please note that this not an immediate termination notice and you are still a valued participant in the Amazon Associates Program. But if the governor signs this bill, we will need to terminate the participation of all Illinois residents in the Associates Program. After that point, we will no longer pay any advertising fees for sales referred to amazon.com, endless.com and smallparts.com nor will we accept new applications for the Associates Program from Illinois residents.
The unfortunate consequences of this legislation on Illinois residents like you were explained to the legislature, including Senate and House leadership, as well as to the governor's staff.
Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states' residents.
Governor Quinn's office may be reached here.
We thank you for being part of the Amazon Associates Program, and wish you continued success in the future.
Sincerely,
Amazon.com
IF the law was passed and upheld, it would be because Amazon does business in illinois through purchase portals hosted on web sites operated by residents of Illinois.
If the courts didn’t think that the arrangement really created the “nexus” they were looking for, the new law would have no effect.
Amazon doesn’t appear to want to take a chance of that in court, and would rather cut off profitable business arrangements than take that chance.
Not to excuse tax cheats, but I have two words: Laffer curve :)
Ahhh, OK but a Law won't cut it. You must Amend the Constitution to do such.
No, he wouldn't.
There is no use tax form in Oregon, because there is no sales tax in Oregon.
Thanks. I got tired of checking each state’s rules, and so I didn’t know that Oregon was a no-tax state. Are there any states next to Washington that have sales tax that I should use for the next time I want to make this example?
Actually, you don’t. A national law providing for sales tax to be paid to states for purchases made across state borders would fall directly (and rightfully) within the Commerce Clause of the constitution.
The reason there is no collection of taxes now is that Congress has never passed a law authorizing it.
Idaho. :-)
I see. However states are not allowed to imposes taxes or duties on sales of goods to another state. Further the Constitution tells us all powers NOT given to the states then fall to the Feds. The states Do have power to lay taxes on citizens who live within their states borders. So then the Fed does not have power to enact a law the State already has.
So like I said until you Amend the Constitution any such law is Unconstitutional and would be stricken down.
“Amazon seems focused on making sure that no court case gets filed on this matter. That’s not the position of a company that is sure it would win on the merits.”
I think you’re confused by their action. Amazon makes lots of money world-wide. Court cases are expensive and a crap shoot. They don’t need the business of folks in the State of Illinois, which is puny compared to its world-wide take. So Amazon, in essence, is telling Illinois to f-— off.
As for Illinois’s law being upheld by the SCOTUS, there would be no surer way to destroy internet commerce than for all other states to try to do the same thing Illinois’s attempting to do to Amazon. Because next will be L.L.Bean, Land’s End, Starbucks Coffee, etc.
We should all be encouraging the expansion of business, not using taxes to strangle any growth.
First, a sales tax is not a tax on the business selling the items; it is a tax on the people BUYING the items.
So a national sales tax collection law would not be allowing a state to tax a business in another state, it would be requiring a business selling things to people in a state to collect that state’s sales tax.
Because the feds have done nothing, the courts have ruled that a state can only ask a company to collect taxes from sales in the state if the company has some business “nexus” within the state. That term is not precisely defined, but it covers an online sales outlet that also has stores, and in some cases includes franchises, and independently owned-and-operated businesses that license the name of the company.
Amazon has gone so far as to make sure that it’s shipping warehouses are actually separate business entities, so that they don’t have to collect sales taxes in states where they ship their products. Some states have threatened to challenge that “separation” as not being sufficient, but Amazon threatens to remove their warehouses if they do.
The affiliates program is another way states have looked to go after Amazon, and so far Amazon has threatened to pull affiliates.
BTW, if the congress wanted, they could pass a law that allowed states to collect duties on sales of goods to another state, not that I think they should.
Here is my two assertions about this discussion. First, a lot of people violate their state’s tax laws; if the states had a foolproof way of finding and punishing those people, most people would follow the use tax laws of their state, just as they follow the income tax laws (since the state gets pretty good records of income).
Second: If the states COULD crack down on tax cheats, such that everybody felt compelled to follow the law and do use tax filings, then people would overwhelmingly WANT Amazon to be forced to collect the sales taxes, because they would hate having to keep track themselves and file the paperwork and pay the bills themselves (Virginia is pretty easy, once you keep the records, you just file one more form on your state income tax).
The only reason Amazon gets away with these threats is that a LOT of people have no idea they are supposed to pay sales tax, and think that this is a NEW TAX being pushed on them, rather than the state making things EASIER for them to obey the law.
An analogy. Suppose there were no speed limit signs, and instead everybody had to remember the law as written about the speed on various roads. Suppose further that the state cracked down on all speeders, and was giving out tons of tickets to people who couldn’t remember whether a divided highway was 55 or 50, or what it drops to if there is an undivided section.
DOn’t you think that people would SCREAM for the state to install speed limit signs, in order to help them obey the law?
That’s what this is — helping us obey the law. It will cost Amazon almost nothing, because they already have the software in place. It only hurts people who are currently NOT paying their taxes as they are supposed to.
BTW, there are other ways states have been trying to approach this, and Amazon fights those as well. One attempt was to get Amazon to simply provide a record of all purchase shipped to a state. This would be trivial for Amazon to do, and wouldn’t require them to send any money, or calculate anything, or collect anything. But Amazon still fights this — because it would make it hard for their customers to cheat on their taxes, which is part of Amazon’s selling points, that you can buy from them, and cheat on your taxes and therefore save money.
Soon, I think the states are going to go after credit card records instead. I would oppose these measures, but understand why — it’s because we can’t do a reasonable thing and impose a national sales tax collection scheme.
I think I’ll stop pushing this soapbox now. I know few people will agree with me, and I’m repeating myself.
Thank you all for a wonderful debate.
No they can't, not without amending the Constitution.
For several reasons but one of the main ones is this clause:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"
Any such law has to be uniform so all state taxes would have to be exactly the same as in amount and exactly what items would be taxed. This is where the conflict arises. States have the power to tax their own citizens however for them to tax sales outside of their state they need Congress to write the law which by definition of the Constitution must be uniform. For the law to be uniform the Feds must mandate how much sales tax they can charge which they cannot do because the Constitution also says (by way of the Tenth Amendment) that any Power not designated to the Fed. Gov. is left to the States.
This isn’t new taxes, nor is it a tax on Amazon.
The law would NOT be a tax. The law would control interstate commerce by requiring companies that ship items to residents of a state to collect the sales tax those residents owe to the state.
It’s not a duty, a tax, or imposts and excises.
I’ve surmised that fact.
The State of Illinois’s actions, however, indicate their intentions; to have other states collect taxes for Illinois or have out of state businesses do it.
If what Illinois intends is to legally force Amazon into collecting the taxes of Illinois’s citizens, then that company can say goodbye to its customers in Illinois and refuse to do any business in that state.
I suspect Amazon will no longer do business with anyone in the State of Illinois.
Still Unconstitutional, the States have the power to lay state taxes therefore the Fed Gov can't write law which deals with such due to the tenth Amendment.
The feds wouldn’t be messing with the state’s right to set sales taxes. The feds would be enabling the states to collect sales tax to be paid by it’s residents.
Of all the detailed analyses of the various proposals to solve this problem, I’ve never seen any suggest that there would be a constitutional issue. I want government to strictly adhere to the constitition — but I don’t see a constitutional problem here.
They already have that power, they just can't force an out of state entity to collect it for them and Congress can't Constitutionally get involved in such an issue because of the tenth.
BTW this very same issue was tried with catalog sales and it failed because of the exact same issues.
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