States are continuing to come up with ways to collect sales tax from online sellers (specifically Amazon’s third-party sellers). South Carolina recently filed a motion in court to force Amazon to collect these taxes and fees on behalf of its third-party sellers.
As it is now, Amazon collects sales tax on items purchased directly from them, but the retail giant does not collect it on sales made on the site by a third party. South Carolina is claiming it could lose more than $500 million in sales tax if Amazon doesn’t begin collecting them now, and is asking the court to require the retailer to charge sales tax and put it into a trust or escrow-type account until the case is settled. Read More
Are you still considering whether to take advantage of the current amnesty program? Designed as a way for online sellers to become compliant in states they may have created nexus (either intentionally or inadvertently), the voluntary program provides an opportunity for these businesses to come forward if they haven’t been collecting income, franchise, use or sales tax.
How the Amnesty Program Works
There is a new scheduled amnesty program that may help businesses correct overlooked tax obligations if they have been selling products and services in other states. Many companies engage in multi-state sales through an intermediary, like Amazon, eBay and similar organizations called “fulfillment services.” The fulfillment centers place a seller’s inventory in warehouses in multiple states to expedite shipping, but in the process, create nexus for the seller in those states. As such, the sellers have an obligation to collect sales tax and pay income tax. Unfortunately, unpaid taxes may incur penalties and interest. Now there may be a short time window to correct these errors and avoid interest and penalties. Read More
Now more than ever Amazon has been a one stop shop for many consumers. Not only can you buy just about anything you can think of on the Amazon website, but you can also receive lightning fast delivery of whatever you buy. Over the past few years, Amazon has taken their company to the next level. Now, in addition to selling items, Amazon provides a fulfillment service to online retailers.
As Amazon puts it, their fulfillment business “helps you grow your online business by giving you access to Amazon’s world-class fulfillment resources and expertise.” Simply put, the online retailer sends their products to Amazon. Amazon stores the item at one of its distribution centers. Once the item is purchased, Amazon packs and ships your product to the customer. In addition, Amazon provides customer support. While it certainly Read More
This month, May 2014, Amazon was welcomed with open arms to the sunshine state. Florida should be happy by its theoretical increase as Amazon will begin charging, collecting and remitting tax in Florida. Sparking the collection agreement was the fact that Amazon has built two large distribution centers in Florida, which gives it the fatal sales tax nexus. For customers, this means that they will be charged the 6% state sales tax rate plus the local sales surtax rate, which can run between 0% and 1.5%.
As stated above, Amazon is building two fulfillment centers in Florida, creating more than 3,000 jobs. The locations will be on Florida’s west coast. Specifically, the centers will be just outside of Lakeland (East of Tampa and South of Orlando) and Ruskin (South East side of Hillsborough County). The project should also be a boom for the local economy and allow all Read More
As many people know, Amazon has been clashing with many states whether it should be required to charge, collect, and remit sales tax. Many states have taken the position that Amazon’s affiliates and distribution centers created the dreaded “nexus.” If an online retailer (or any company) has so-called “nexus” it is required to charge, collect, and remit tax in that state. With millions of dollars at stake, Amazon threatened to pull its affiliate programs in those states which, in turn, would cut tens of thousands of jobs. Fearful of huge job cuts in a struggling economy, many states allowed Amazon a grace period, permitting the company to continue its program and not collect sales tax for x number of years in the future. Once the grace period expired, then Amazon would have to charge, collect, and remit tax. In return, the state would keep its jobs as well as get more tax Read More
A spokeswoman for Australia’s Assistant Treasurer Arthur Sinodinos has indicated that tax-base erosion and profit shifting will be a key focus of the G20 during Australia’s Presidency.
In this connection, speaking before he left for this week’s Davos conference, Australian Prime Minister Tony Abbott said “We want to … try to ensure we have less leaky national taxation systems”.
Commentators have variously encouraged the Prime Minister to push for the publication of taxable incomes of transnational companies by local tax authorities, seek a global solution to the perceived problem and to work within the OECD tax treaty framework to Read More
Over the past year or so, click through or affiliate nexus has dominated the sales and use tax professional community. Contrary to popular belief this is not a new a “new” tax. Rather, the issue really boils down to whether certain online companies can be forced to collect sales and use tax in states in which they have no physical presence. In March 2013, New York’s highest court ruled that a state can make a law that required an online retailer to collect tax in a state in which it does not have any traditional physical presence. This click through nexus applies if a company pays commission for the in-state company’s website for generating sales for the online retailer. There were actually two such cases, against Amazon and Overstock. Both companies believe that this ruling runs contrary to the Dormant Commerce Clause of the United States Constitution and prior United States Supreme Court rulings. Therefore, on August 23, 2013, both Amazon and Overstock filed a petition to ask the United States Supreme Court to hear the case.
While technology has changed the way we live and do business, the Supreme Court of the United States (SCOTUS) has not heard a case since 1992. This has lead to difficult planning for businesses and state and local tax professionals since the invention of the internet. We get calls almost daily dealing with nexus related issues and what a company should be doing in this era of uncertainty. Read More