Internet Sales Tax: It’s coming and there will be casualties…

One of Amazon’s advantages over competitors was that is was always good at riding the fine lines when it came to paying taxes. Because of that, consumers have been able to reap the benefits of slightly lowed costs for goods.

The amount of potential tax revenue not being paid has not been lost on the US government.

In Texas, because of the Naishtat Bill and because Amazon has become the target of Texas Comptroller Susan Combs, Amazon announced its plan to leave the state, closing a warehouse in Irving and abandoning intentions to hire 1,000 workers. It appears Amazon would rather leave the state of Texas than pay the estimated back taxes of $269 million.

Today the Governor of Illinois, Pat Quinn, signed legislation today to require online merchants with a physical presence in Illinois to collect and remit sales tax.

Amazon and Overstock.com are not taking this very well.

Now both of them are talking of leaving the state of Illinois by stopping all of their affiliates that reside there. Reactions from some other companies have been positive. Walmart is welcoming the moves and so is Illinois based Sears Holdings Corporation.

But who are the one that are really getting hurt from all of this?

The people are the ones suffering the most. While the jobs lost in one state could possibly be created in another state, it is still causing issues of displacement and anxiety. Small businesses that rely on revenue from Amazon’s and Overstock.com’s affiliate programs also lost out tremendously.

This is a wake-up call for people and small businesses that rely on affiliate programs for revenue. In this tax regulation transition period it is imperative to pay attention to possible laws and how they may adversely affect your business.

photo credit

Comments
2 Responses to “Internet Sales Tax: It’s coming and there will be casualties…”
  1. Edward Harsh says:

    I couldn’t agree more, G. I think we are going to see a lot more of this behavior as states search for new sources of revenue amidst the shortage of federal funds available. Amazon is demonstrating that organizations are indeed willing to pick up and move operations elsewhere if these taxes are imposed upon them as operating in states without these taxes is an integral part of their business model. As you mentioned, the potential damage to small businesses who work with Amazon is also huge.
    I, for one, make the majority of my high dollar item purchases through online retailers solely for this reason – I don’t want to pay sales tax. If this were to go away, the online retailers would surely have to increase their prices to adjust and consumers like myself would rethink the way they shop.

    • Gian Sorreta says:

      Still, I wonder if Amazon’s and Overstock.com’s hardball tactics will work in the end, and how much it’s bottom line will be affected by leaving those states.

Leave A Comment