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Tech Bytes - An Amazon/Ebay Alliance?

By Mitchell Walbridge

Fri, May 10th, 2013
Posted in All Columnists

An Amazon/Ebay Alliance?

Online shopping is a revolution of our modern world. Web-based companies such as Amazon and Ebay dominate online sales of almost anything—electronics, books, collectibles, jewelry, office supplies. You name it, they’ll ship it! Of course, Amazon sells the majority of its merchandise through other merchants. But there’s an underlying issue that relates to online retailers like Amazon. Can you guess what it is? That’s right, sales tax.

In 1992 the Supreme Court case Quill Corporation vs. North Dakota ruled that retailers would not have to collect sales tax unless the merchant had physical presence within the state, meaning a store or office space. This ruling has stood until today. However, now this ruling is being challenged as the United States Congress is working to pass a law requiring that all online retailers pay state sales tax regardless of whether or not they are actually physically in the state.

For years this proposal has been looming as states have faced budget deficits, and now they want every revenue dollar they can get. Amazon, for years, has been on the frontline lobbying against the legislation. But how far are measures likely to progress? Well, this time the odds are looking pretty good. The Senate voted on Monday, May 6 with bipartisan support for the bill. What appeared to be smooth sailing in the Senate may end up hitting a road block in the Republican-controlled House where many see the legislation through the lens of a tax increase.

As much as Amazon has protested in the past, the online retail giant has fulfilled a pass-the-buck strategy to Ebay. Amazon is shying away from its lobbying days against a sales tax enforcement measure. But why, after so long, would they just give in? The answer: Amazon has supposedly expanded so much that it plans to open facilities within most states to accommodate customers with faster delivery times and other services. Therefore, they’d be forced to pay sales tax anyway. This means that Amazon and Ebay, it seems, will never form the rumored alliance that has been swirling around.

So here’s the interesting part, how will this passed legislation impact the consumers? It’s pretty obvious, sales tax will now (theoretically) be strictly collected. A did-you-know on this subject matter is that, if a state has a sale tax in effect but was not collected by a retailer, it is actually supposed to be paid by the end of the year through a consumer submission process. But let’s be honest, does the loophole radar indicate anything here?

In the coming months it will be interesting to observe how sales tax will be enhanced for online purchases. Could we be opening our pocket books a little more for taxes? That question now remains within the U.S. House of Representatives.

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