eCommerce Frank Ross on 14 Feb 2008 05:21 pm
Amazon Merchants and Sales Tax
I saw this bit on the NY Times blog about Amazon Sales Tax in New York State. As we all know, internet sales tax is about to be levied one way or another. That piece is about New York State sales in general, but it reflects a larger problem with Amazon and sales tax.
Their shopping cart charges me sales tax because I live in Washington State where presumably Amazon has a physical presence. Ok fine, I understand that. When I sell something to someone who is having it shipped in Washington State I have to charge them sales tax.
When I was a merchant on Amazon I had to eat the sales tax because Amazon’s seller account system did not calculate it. It just didn’t have a sales tax feature. This was a recently as November of last year. I asked about this numerous times and each time I got the same answer in various forms: ‘We expect the seller to absorb the sales tax’.
This might work for things like media where the dollar value is less than $20 but I was selling things in the 50, 100 and 200 dollar range. At 8.9%, there wasn’t enough margin to ‘absorb’ the sales tax. So what did I do? I canceled the orders that were going to ship to Washington locations. Bad practice and I was never really comfortable with it, but I simply couldn’t afford to absorb the extra 10 or 15 dollars for sales tax that I couldn’t collect.
The idea with online merchants and sales tax is the merchant collects the tax, then pays it back to the state at certain intervals (sometimes quarterly). Technically that’s a wash although it really isn’t when you consider the administrative work involved in reconciling the state tax (which I outsource to my accountant). But it’s certaintly no a wash if you have to absorb it. Amazon needs to face the sales tax music sooner or later!
Tags: Amazon Sales Tax, Internet Sales Tax, Online Sales Tax, eCommerce Sales Tax