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发帖数: 99 | 1 Amazon in Detroit could lead to tax on purchases from company being taxed in
Michigan [Detroit Free Press]
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July 15--Signs that Amazon.com could be in the early stages of establishing
a software development center in Detroit begs the question:
Are the days of tax-free purchases at the Internet retailer numbered for
Michiganders?
Not necessarily.
Even though companies are supposed to collect sales taxes when they set up a
physical presence in a state, Amazon has managed to evade this requirement
in a number of locations where it operates warehouses, distribution centers
and other facilities. It has avoided charging sales taxes by setting up
these facilities as separate companies, sometimes referred to as independent
subsidiaries.
"There is a lot of ambiguity on whether a company that separately
incorporates an office from its retail arm has to collect online taxes or
not," said Michael Mazerov, a senior fellow at the Center on Budget and
Policy Priorities, a policy think tank in Washington, D.C. "It's kind of a
gray area, and Amazon has been aggressive at exploiting that gray area."
This strategy has already been used in Michigan, where Amazon owns a
subsidiary called Brilliance Audio, a Grand Haven-based audio book publisher
. Despite this physical presence, Amazon does not charge its Michigan
customers the state's 6% sales tax.
So far, the Michigan Department of Treasury has not taken any action against
Amazon. Treasury spokesman Terry Stanton said the state considers
Brilliance Audio to be a separate entity rather than a division of Amazon.
Whether an Amazon software development center in Detroit would trigger the
sales tax for Michiganders shopping on Amazon.com remains to be seen. The
Free Press reported on Tuesday that the retailer appears to be in the early
stages of creating the center, according to two job listings from the
company. Amazon, which is based in Seattle, has declined to comment about
possible plans for Detroit.
Amazon currently operates warehouses, distribution centers, offices and
other facilities in 18 states, but collects sales taxes in only six of them.
But over the last two years, some budget-strapped states have decided to get
tough with Amazon and other online-only retailers, passing laws that will
force these companies to collect sales taxes if they have any kind of
physical presence in a state, including affiliated businesses and
subsidiaries. Other states, such as Virginia, have opted to give Amazon only
a short-term exemption from charging sales taxes.
States have come to realize that the rapid growth of online shopping is
eroding their sales tax revenues, which on average account for a third of a
state's total revenues, according to Mazerov. A report released last year
from the Michigan Treasury Department estimates the state stands to lose $1.
6 billion in e-commerce sales taxes from fiscal years 2005-13 because online
-only retailers are not collecting the taxes.
Consumers and businesses are supposed to voluntarily report the amount of
sales taxes they owe for online and catalog purchases on their state income
tax returns each year. But few individuals do so. Michiganders reported only
$5.3 million worth of these taxes in 2010, about 1.3% of what they really
owed that year, according to a state Treasury Department report.
So far, Texas has been the most aggressive in pursuing these taxes, going
after Amazon for $269 million in unpaid sales taxes because it had operated
a warehouse north of Dallas. After a lengthy battle, Amazon agreed to start
charging sales taxes to its Texas customers at the start of this month.
In Michigan, legislation was introduced last fall that would require online-
only retailers to collect the state's sales tax, just like brick-and-mortar
ones do. The law would also apply to companies if they have affiliated
businesses or subsidiaries in a state, which would close the loophole that
currently exists.
"The days when Amazon could expect a definite exemption are gone," said
Jason Brewer, spokesman for the Retail Industry Leaders Association, a trade
group. "States have grown wise to the trick."
For its part, Amazon has repeatedly said that it wants Congress, not the
states, to resolve the issue. "We are working with members of Congress,
retailers and the states to get federal legislation passed this year,"
Amazon spokesman Scott Stanzel said in a statement.
But trade groups representing brick-and-mortar retailers in many states,
including Michigan, are not waiting for Congress to act. They are actively
trying to pass new state laws because they say not charging sales taxes
gives Amazon and other online-only retailers an unfair advantage over many
mom-and-pop businesses.
"This is the No. 1 legislative priority for the Michigan Retailers
Association," said Bill Hallan, the group's vice president of government
affairs and general counsel. "There should be fairness and equity in the
marketplace."
Contact Katherine Yung: 313-222-8763 or k***[email protected] |
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