Amazon Agrees To Collect Sales Tax In Calif.; Is CT Next?
by Christine Stuart | Sep 26, 2011 5:30am
(7) Comments | Commenting has expired
Posted to: Business, Town News, Legal, State Capitol
Last week the Internet retail giant Amazon reached a deal to collect sales taxes in California, but in June it ended its relationship with online affiliates in Connecticut after the state passed a budget requiring all online retailers to remit sales taxes to the state.
Connecticut Gov. Dannel P. Malloy said he believes the Nutmeg state’s decision will help convince Amazon to begin collecting sales taxes here too.
“This is a movement,” Malloy said Saturday. “I told you all that I was prepared to play a leading role in the movement.”
“Obviously they have the market impact because let’s be honest Amazon wasn’t going to turn off every local supplier in the state of California,” Malloy said. “But as we get more states to join us it will be easier to get the states to cut that kind of deal.”
With struggling states looking for new revenue opportunities, Amazon’s $34 billion in mostly untaxed annual revenue was an attractive target, especially this year when many state‘s like Connecticut struggled to close budget gaps. The tax is projected to bring in about $9.4 million, if Department of Revenue Services Commissioner Kevin Sullivan is able to collect it.
In the years since Amazon started the affiliate program—which allows companies to publish links to Amazon products in order to earn a commission on any business they send to the online retailer—hundreds of millions of people have grown comfortable with the idea of using credit cards online, and the amount of money spent on the Internet has exploded. Consequently, billions of dollars in yearly retail purchases have moved out of the local brick and mortar stores — where sales taxes are charged and local jobs are dwindling — and up to the tax-free cloud where software has replaced most of the jobs. Amazon and 50 other online retailers ended their relationship with Connecticut affiliates in June.
Many brick and mortar retailers have long contended that Amazon’s lack of retail space gives the online retailer an immediate 6.35 percent price advantage as they are not required to collect sales tax. Amazon currently collects sales tax in four states where they have a physical presence: Kansas, Kentucky, North Dakota, and Washington state.
But Amazon also collects sales taxes in New York - the result of legislation passed in 2008 that declared affiliate marketers as a physical presence for the purposes of sales tax collection. Amazon is contesting the law but thus far has been unsuccessful in overturning it.
“There were people being pretty roundly critical of the step that Connecticut was taking, but it was a vital step in getting other states to do that same,“ Malloy said.
In addition to Connecticut, Arkansas, Colorado, Illinois, Rhode Island, and North Carolina have all passed legislation to require online retailers to remit sales taxes. Legislation is being considered in Minnesota and a handful of other states.
The one difference between California and Connecticut is that Amazon is looking to build a physical presence, a large distribution center, in that state. It has also been in negotiations with Texas because of plans to build a distribution center there too.
Tags: Amazon, Connecticut, California, Malloy, sales tax
(7) Comments
posted by: ... | September 26, 2011 8:18am
Amazon already collects taxes in multiple states, and then tries to run away from others that want to as well?
I think they’re realizing with hypocritical actions like that, they’re not going to win any court cases anytime soon. Might as well join the trend of online retailers that legally collect the sales tax.
posted by: Disgruntled | September 26, 2011 9:08am
Leave it to Dan to take credit for this “movement” as he calls it. He sounds like Al Gore inventing the internet.
A self-serving pat on the back for another tax that allows him to continue with his profligate spending.
I will praise Dan if he can grab some of the thousands of jobs and hundreds of millions that AMZN will be spending in California to enhance distribution that will probably be the final nail in the coffin of brick and mortar retailing.Bezos wants same day delivery on your order…
It was never a matter of tax collection,except for big spenders like Dan.
I suppose the days of politicians embracing movements to regulate corrupt business and proposing and enforcing laws that might improve the human condition are over as well.
posted by: CTResidentForLife | September 27, 2011 12:22pm
Taxing Amazon sales will not benefit the taxpayers of Connecticut. The Democrats will simply have more money to waste. They are still bonding like there’s no tomorrow. What I don’t understand is how they can single out a business to collect taxes. I guess times haven’t changed since King George III. The King wants money so they just do what they want. In Connecticut, the loyalists outnumber the Patriots and Tea Party.
posted by: Disgruntled | September 28, 2011 12:30pm
Today’s announcement by Amazon is just another step in retail domination.
Again,Bezos has a goal of same day delivery. You get a taste of it with Zappos. It is just around the corner.
California will reap the benefits to the tune of thousands of jobs and hundreds of millions of dollars of infrstructure spending by AMAZON.
Dan should have been knocking on Jeff’s door with the same pathetic enthusiasim he chases handouts and grants. Instead of a CT. office in DC perhaps an office in Seattle would benefit Nutmeggers more.
Dan will get to tax and spend Dan,riding on Jeff’s coatails,but AMAZON will also be driving bricks and mortar business into oblivion.Enjoy THAT movement!
posted by: kevin47 | September 29, 2011 9:55am
Oh Danny Boy, before you start crowing—take score. CA struck a deal. Will CT? The only “movement” you started was forcing some good, hardworking, CT based entrepreneurs to hit the unemployment line because YOU got us fired by Amazon.
You should have struck a deal with Amazon, like CA, NOT pass a law that doesn’t work. Until you get Amazon to reopen its associates program to CT residents; you have accomplished nothing.
Can you step off the podium for a moment and see reality? The Amazon Tax law you approved hurt CT residents…you better make it right or we won’t forget!
posted by: Sadie | September 29, 2011 11:48am
Dan must want to raise taxes to pay for the 6 new judges being appointed next month. I’m glad CT doesn’t have any money, and bullied it’s state workers into an illegal 2nd vote for concessions, but we have money to appoint judges at over 100K per pop. That’s right, just keep taxing everyone.
posted by: Ken Molti | September 30, 2011 10:22am
Kevin47 said it best - The only movement Mr. Malloy started was moving CT based entrepreneurs to hit the unemployment line because he got us fired by Amazon and dozens of other online retailers. The Governor talks about increasing jobs and and helping small
business. But his actions do just the opposite.
I’m still not sure Mr. Malloy understands exactly what affiliate advertising is, and what he has done to destroy it in Connecticut.
I’m also not sure he sees the difference between distribution centers and affiliate advertisers. Amazon needs distribution centers. But Amazon
does not need affiliate advertisers if the cost is too high - and Mr. Malloy has made the cost of affiliate advertisement very high for retailers.
Any business person would do the same thing that Amazon and dozens of other online retailers did - it is simple math.
The incremental value in
sales used to be 5% paid to the affiliate advertiser for every sale they brought in, and no cost to Amazon for sales the affiliates did not bring in. Pretty good dead for both parties. It was a great opportunity for the little guy to advertise with the big sites.
But the Governor mandated that if a retailer had any relationship with even a single connecticut affiliate advertiser, then the cost of *all* orders from Connecticut, regardless of whether it came in through an affiliate advertiser, would be subjected to 6.25% in sales tax. That’s a bad deal for any business. No wonder why all the retailers dropped Connecticut affiliates.
Malloy pushed through a law that he didn’t understand, and that he still
doesn’t understand. Amazon will not negotiate with him. They have no
reason to. They are still selling to people in Connecticut. They are
simply using other forms of advertising that doesn’t involve Connecticut
affiliates. Make no mistake, the only movement Dan Malloy started was
getting Connecticut affiliates fired.