Okay, here’s one to check on the stupidest things you’ve ever heard meter: Residents of North Carolina are required by law to pay their own use tax on items when an online retailer doesn’t charge them sales tax! You think most people do? Nope, they don’t. Sounds like I’m picking on North Carolina lately, but I’m not. Not my fault they are so popular and newsworthy of late. However, the truth is, all states pretty much have the same rule. Just nobody remits the tax. Who would? Oh those honest people. Ask around, see if you can find any. See, there’s just no real way to enforce this.
So North Carolina was trying to get Amazon.com to give up personal information on customers in NC who purchased on Amazon.com. You think they won? They didn’t. ACLU was on the case and Amazon will not be required, or any other online retailer for that matter, to give personal information to the State of North Carolina. North Carolina claimed they didn’t want personal information, like what books customers were buying, only names and how much.
States are crazed about this you know. They think they are losing billions in sales and use tax revenue. Texas has slapped the online retailer, Amazon, with a $269 million tax bill for sales that they say were made to residents in Texas from 2005-2009. See, the Supreme Court ruled that if you (the online retailer) have a physical presence in the state, then you are required to collect sales tax from sales in the state. So what does Amazon do? They shut down the distribution center, scraped plans to expand it and said see ya later to all the employees. Texas made it worse by refusing to release the information from which the amount of the sales tax was calculated. Sounds a bit suspect.
So here’s what I think. If your online retailer is not in the state you reside by physical presence, you don’t have to pay sales tax on the purchase. Too bad “state where your online retailer resides”, but you don’t live there so you don’t owe whatever state any damn tax money. WTF
Now, I know that some online retailers have agreed to collect tax for states, and I think that’s wrong, but I have a choice not to buy from that retailer. The state where the retailer has a physical presence gets other taxes from the sale of the merchandise, like corporate income tax for example. Quit whinning. And, any online retailer that has a store, distribution center or office in a state is generally accepted as having a physical presence in the state, so they are required to collect sales tax on sales in those states. Fair enough, if you live in those states.
The problem isn’t that states are losing revenue and looking for places to find it, the problem is government mismanagement, waste and downright corruption. Fix it.