In a strange twist, Internet retail giant Amazon is both supporting and fighting the effort to get sellers on the web to collect state sales tax.
Late last month, Amazon filed a petition with the U.S. Supreme Court to hear the company’s appeal of a 2008 New York state law. The law requires online retailers to collect sales tax.
While opposing the New York law, Amazon is in support similar sales tax laws in states such as New Jersey and California.
The reason why –and the outcome of the case itself – are important to know for those looking to get a degree or certificate in business. Internet commerce is a key component in the future of many businesses and the way the government decides to collect taxes is going to have a big impact on its future.
In the New York case, Amazon has hired Ted Olson, the famed Washington D.C. attorney, to argue its case. However, part of the argument will be explaining how Amazon can support online retailer sales taxes in one state but not others.
The New York law, according to a BusinessWeek article, says that retailers with affiliates in the state – smaller websites that make money by referring customers to Amazon and then making a commission on the sale – must collect sales tax.
Other states simply require retailers with physical operations in a state to collect sales tax.
Amazon doesn’t like the New York law – and a similar one in Illinois – because it allows Internet sellers to circumvent the law simply by not allowing any affiliate sites in the state. Amazon itself has discontinued allowing affiliate sites in New York or Illinois until the laws are changed.
Rather than a state by state law, Amazon CEO Jeff Bezos has supported the proposed federal Marketplace Fairness Act which would require all online retailers to collect and remit sales tax.
According to BusinessWeek, Amazon – which now operates in nearly every state and has more than 100,000 employees – knows it eventually will collect sales tax in every state. Its focus now is to provide a level playing field so that other retailer has an advantage by exploiting a tax loophole.
