"Amazon Tax" Laws: "Unwise and Unconstitutional"?
Joseph Henchman, Tax Counsel, Director of State Projects at The Tax Foundation ,has published a REPORT on the hazards of states imposing "Amazon Tax" laws.
The report provides a great overview of the controversial aspects of "Amazon Tax" laws and also provides a current list of the status or proposal of "Amazon Tax" laws in various states.
Some of the key findings Joseph mentions are:
- Frustrated by their inability to impose tax collection obligations on companies with no substantial connection to their state, several states are considering the adoption of "Amazon" tax laws. Such laws currently exist in New York, Rhode Island, North Carolina, and Colorado.
- An Amazon tax law requires retailers that have contracts with "affiliates"-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state's sales and use tax.
- Amazon taxes are unlikely to produce revenue in the near term. New York continues to face a lengthy legal constitutional challenge. Rhode Island has even seen a drop in income tax collections due to the law.
- Amazon taxes do not level the playing field between brick-and-mortar and Internet-based businesses because they require Internet-based businesses to track thousands of sales tax bases and rates while brick-and-mortar businesses need to track only one.
- Unconstitutionally expansive nexus standards like the Amazon tax undermine legal certainty, burden interstate commerce, and harm economic growth.
Go to "Amazon Tax" Laws for all of the details.
As an advocate for taxpayers, I think the Amazon Tax laws are overreaching, burdensome, and potentially unconstitutional. On the other hand, I understand our economy has changed, and perhaps, states’ tax systems need to change as well.
With that said, states should seek to create reasonable and enforceable tax laws that do not create a compliance burden that is unfair or impractical.
I understand each state’s budget/fiscal problems are serious; therefore, they are looking for revenue everywhere.
Has anyone ever stopped to think . . . . would the states be attempting to pass and enforce Amazon tax laws if they were not experiencing budget problems?
Just a thought.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.