The Amazon Tax
In 1998, I got to Barnes & Noble a year after its website had launched, and there was a lot of hoo-ha over sales tax.
Ordering over the web was seen as ordering by catalog - you don't have to pay sales taxes unless you're in the same state as the company. So if you order turtlenecks from L.L. Bean, for example, you don't have to pay taxes unless you are in Maine, where L. L. Bean is headquartered.
At Barnes & Noble, the Riggios spun off the website into its own separate company, and sold half of that company to Bertlesmann. This way, they didn't have to charge sales tax on website orders from outside of New York - it was a separate company from B&N, Inc., and had no physical presence in 49 states.
This made everyone insane.
It diluted the B&N brand. Because they were two different companies, run by two different sets of officers, they were very compartmentalized. The stores were not trained to refer people to the website. Web customers couldn't return books to the stores if they'd ordered the wrong thing. People would print out web pages and take them into the stores, and couldn't get the books they wanted - the stores couldn't even order the books. There were two sets of distribution channels. There were separate warehouses. There were separate relationships with vendors.
And of course the customer didn't understand AT ALL what it meant that there were two different corporate entities called Barnes & Noble.
Eventually the Riggios realized that it might be worth charging sales tax for the convenience of having a single company with two distribution channels. So Bertlesmann was bought out, and the companies merged. There are still two sets of officers, but the back office is much more integrated than it used to be. There's cross-promotion between the website and the stores. It makes sense.
New York just instituted a law determining that Amazon affiliates count as physical presences in the state. In other words, if I sell used books on Amazon from my big storage closet that also houses my clothing, empty boxes I think might be useful someday, Rollerblades and ice skates, my old journals from college, miscellaneous office supplies, and 37 mismatched winter gloves - that storage closet counts as a New York shop. And I have to charge sales tax. Even on the mismatched gloves, if I am selling them (which I am happy to do if anyone wants them).
The caveat is that I must sell over $10,000 worth of merchandise for this law to apply to me and Amazon. Somehow I cannot see selling $10,000 worth of used books and mismatched gloves.
Additionally, this law does not apply solely to the affiliates - in other words, ALL of Amazon's inventory is subject to sales tax because my fragment of it is physically located in New York (and presumably I wouldn't turn away anyone who showed up at my doorstep wanting to buy it on-site). Because my inventory shows up in a search result for "used books and odd gloves" along with all the other inventory in all the other affiliates' shops, my inventory more or less contaminates theirs and they have to charge New York sales tax as well. It's guilt by association, sort of.
I would argue that the tax law should only apply to the inventory that is physically located in the state where the customer is ordering from. I think the New York law overreaches a bit. Another solution is a
universal sales tax...but that's not going to go anywhere fast. The US doesn't like flat taxes.
What I offer:
