Amazon, eBay Wrestling Over Newest Online Sales Tax Plan

This looks like the beginning of the end for tax-free online shopping.

Federal lawmakers from both parties today are unveiling their plan to close a loophole in federal tax law that has let retailers like Amazon and eBay avoid charging sales tax to shoppers in many states.

Amazon has long said it would support a change in national sales tax policy—but true to the company’s style, it was an all-or-nothing bargain.

Until the feds got things sorted out, and states made their sales tax laws more uniform, the mega retailer was perfectly happy to take drastic measures like closing down affiliate networks and warehouses when state officials demanded their cut of the action.

But Amazon apparently started to see the benefit of dealmaking, and the dominoes have been falling for the past couple of years toward a national online sales-tax policy.

Amazon once only collected sales taxes on purchases in a handful of states (including its home of Washington), but the company has worked out agreements to start sending sales tax collections to several new states, including California, Texas, Pennsylvania, and Massachusetts. This is tied to the company’s need for more shipping centers to speed its deliveries, and branch offices to accomodate its appetite for tech workers.

At the same time, the company has pushed harder to get a federal system in place. In some cases, state officials (like Massachusetts Gov. Deval Patrick) have made it pretty clear that they would be pushing for a federal online sales tax law once Amazon started playing nice in their states.

Today, Amazon chief lobbyist Paul Misener,  thanked sponsors of the new online sales-tax plan and pledged to work with them to get it passed.

eBay, however, is not so gung-ho. The other online retail pioneer has remained opposed to online sales tax efforts, even maintaining its own webpage full of pugnacious quotes and informational materials about the campaign. eBay reiterated its opposition today.

The fight here is probably going to center around who doesn’t have to collect sales taxes under any new system. The current idea is to make the “small business” exemption start at $1 million in yearly sales outside of a home state. eBay presumably has enough people topping that mark to make it seem like a real problem.

Meanwhile, tech companies who provide tax software are likely cheering the idea. That includes Avalara, a Seattle-area company that could see its client list jump if a lot more “remote sellers,” as they’re called, have to start collecting and sending in sales tax revenues.

Further adding to the tech-industry connections, you’ll note that one of the online sales tax bill’s co-sponsors is freshman Washington state Congresswoman Suzan DelBene, a former Washington state tax official and ex-Microsoftie who represents the Redmond area.

These things take time to get done, but the overall vibe is clear: This train is leaving the station. So if tax-free online shopping was second nature to you, get ready to start doing some double-takes when you check out.

Here’s the letter that Amazon’s Misener sent to Senate sponsors of the new online sales tax bill. An identical copy went to members of the House.

Amazon Letter to Senate

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  • FedTax

    Avalara isnt the only seattle company interested in this legislation – TaxCloud also deserves a shout-out!

    • The Boston Tea Party

      STOP THE TAXES!!! This is insane. We pay way way way too much in taxes as it is. STOP THE TAXES!! This is crazy! (It’s time to start throwing the tea in the water…)

    • John Mayo

      Dont you feel bad trying to stick people with a tax just so your company can get rich?

      • FedTax

        We run a business, not a charity. In the process of running our business we help communities, state and local governments, and small businesses – we are very proud of this!

        What we do is enable retailers to easily calculate, collect, and remit sales tax for every address in the country. We can offer TaxCloud at no cost for retailers because we a paid for by the states to provide the service.

        If people want to repeal their state’s sales tax laws, they can do that at any time by engaging in a dialog with their state legislature. Unless a state’s sales tax laws are repealed, our job is to automate compliance and minimize burdens for retailers. If you were a retailer, you would probably like that.

  • nwmhqqty

    The local companies are fools for pushing for this sales tax. Amazon is going to come into the state, offer overnight shipping, and then there will be one fewer reason to go to the store.

    • GreatTVdude

      You’re absolutely right. Stupid people think people shop at places like Amazon to avoid paying tax, but they’re so far off. If Amazon hasn’t killed them already, it’s about to.

      Also, many of these same small business that complain buy things online themselves. So not only will they be forced with more direct competition from places like Amazon, but they will miss out on their own tax savings. So, ultimately, these business have made things more difficult for themselves. I will be there, not feeling bad for them.

  • mrmanishs2

    Another seller site is Get Me The –

  • mrmanishs2

    Another seller site is Get Me The –

  • Sten Wilson

    As a TaxCloud merchant, business owner and tax payer I see no reason for this legislation to be delayed any further. Technology enabling complete and free sales tax processing now eliminates legacy burdens for all merchants, consumers, and states establishing a fair, new and vibrant marketplace.

    Thank you TaxCloud for eliminating the 1992 bureaucratic burdens eBay continues to wish upon their competitors, and providing new found efficiencies providing my business a newly competitive and fair opportunity in the modern marketplace. I also applaud Amazon’s Integrity, and thank Mr. Misener and his colleagues for their continuing support of long overdue Federal legislation granting States’ rights.

    I strongly support and urge Congress to pass the Marketplace Fairness Act granting States’ rights to efficiently and effectively support residents’ ballot initiatives, local businesses, communities and economies.

    • The Boston Tea Party

      QUIT TAXING PEOPLE!!! Go tax China!! Stop taxing the American people! We are so sick of paying taxes and more taxes and more taxes and more taxes. I’m surprised we’re not paying taxes on the air that we breath (yet!)

  • PhilipCohen

    “eBay Contends That Sales Tax Proposal Will Hurt Small Businesses …”

    eBay disingenuousness, at its best! It’s a long time since eBay has been interested in “small business”; indeed, they are actively engaged in slaughtering small eBay businesses for the benefit of their favoured large national brand sellers that they are attempting to pander to. eBay’s only interest in this matter is in not losing the advantage that online traders have previously been enjoying over tax-paying B&M retailers. Ultimately, eBay is interested only in mechanisms that will help maximise the bonus shares that its senior executives may receive …

    And the ugly reality for consumers dealing with the clunky, unscrupulous eBay/PayPal complex …
    “Shill Bidding Fraud on eBay: Case Study #5″ …

  • The Boston Tea Party

    This is complete crap!! Amazon is a sell-out, and I’m done purchasing anything from Amazon. Stop taxing the piss out of people!! If you purchase goods from another state, and they do not have any offices in your home state, then they should NOT be collecting any taxes, and states should NOT be charging any taxes for sales conducted OUT OF STATE!! All these tax nazi’s need to get their tea dumped in the water, and this country is WAY out of control! NO TAXATION WITHOUT REPRESENTATION, and let the American people vote on whether we want to pay online sales taxes, and put it on the next ballot and let Americans VOTE on whether we want new taxes added. We pay way too much in taxes and states spend that money like drunken sailors. Eliminate taxes, and states need to learn to STOP SPENDING MONEY!!

  • The Boston Tea Party

    I will stop buying from AMAZON and I’m EXTREMELY upset that Amazon is trying to collect taxes or charge taxes. That is completely nonsense! States need to stop charging crazy insane taxes, and any business conducted OUTSIDE of a state (and that includes internet or phone/mail orders outside of the home state) then you should NOT be paying any sales taxes. States charge way too much in taxes as it is, and that’s because states spend money like drunken sailors and they need to cut the budgets, and eliminate spending. Fire all of the union teachers and union workers. Close down the public schools, and eliminate the state pension plans, and all the healthcare benefits for state workers and all of that nonsense. Cut all the fat out, and set up private non-union charter schools and Catholic schools. Cut down on the wasteful spending, and salaries/pensions of state workers, and stop charging more and more taxes! The Democrats in Government are completely out of control with taxing the piss out of everyone!

  • The Boston Tea Party

    I’m extremely surprised that the Democrats aren’t charging us (or taxing us) for the air that we breath. (Yet…) I’m sure Dick Durbin has already thought about the idea of selling/taxing air to the American people. It seems like a nice Democrat thing to do. Democrats establish free trade (no taxes) with foreign governments like China, and then just tax the living piss out of Americans with sales taxes. China doesn’t pay any state taxes to America?

  • PhilipCohen

    Talk about eBay disingenuous objecting to this “fairness” tax …

    Wot, not another “reduction” in eBay fees … when will it all end?

    As usual, the devil is in the detail that the simple regurgitators of corporate media releases never examine …

    ‘eBay said the fee changes are a “part of an ongoing effort to reduce the basic upfront cost of selling on eBay for all sellers, and to make it easier for sellers to see at a glance what it costs to sell.”’—

    In fact, this latest “reduction” in fees represents a quite dramatic increase in fees for items of any value >$50 (a flat 10% instead of a tiered scale) and is a further indication of the parlous state that Donahoe has brought the eBay marketplace to as it continues its slow slide into insignificance …
    The very many negative comments on the ecommercebytes blog are informative …

    Regardless, this latest “reduction” in fees has nothing to do with competing with, or any pressure from, Amazon; this latest nonsense is simply Donahoe’s latest attempt to prop up eBay’s GMV and maintain eBay’s fragile façade for Wall Street …

    This latest desperate fee grab by eBay will undoubtedly drive away many more sellers of other than “under $50 junk”; it will probably be cheaper to take anything of value along to your local traditional auctioneer, where at least your item(s) will be seen …

    Clearly, eBay is in trouble and the headless turkeys nominally in control of this “Concordia” are alternatively yanking the helm from hard-a-port to hard starboard … all the time getting closer to that rocky coastline …

    Still, at least we can still tell that an eBay/PayPal spokesperson is being disingenuous—when their lips are moving!

    And, the ugly reality for consumers dealing with the clunky, manipulative, unscrupulous eBay/PayPal complex …
    “eBay-Facilitated Shill Bidding Fraud on eBay Auctions: Case Study #5″ …

    • John Mayo

      How does the Internet Sales Tax help? Have you seen how crappy websites are that enable the free software? Here is the example Tax Cloud is touting, (Fed Tax owns tax cloud, the guy who posted earlier. Look how horrible it is!,_Sheepskins,_Yarn_and_MORE!.html

      1990 called and wants its Internet back.

      • FedTax

        uhm. Mr. Mayo, what’s your website look like? Yes, FedTax owns and operates TaxCloud. Point of View farm is one of our retailers, just like Point of View farm is one of PayPal’s retailers. It seems pretty shallow to attack a small business owner (that is not a web developer) because of their chosen e-commerce mechanism (in this case PayPal).

  • . .

    i don’t shop locally and now i won’t shop on amazon and ebay. the latter just charged me 7% state sales tax on order from china. RIP amazon, ebay, locals, others.