Legally Going After Amazon, Sales Tax and Congress

Paul Rafelson joins us today to help sellers understand what is going on with Amazon sales tax, whether you should pay it or NOT.

Background

  • Paul Rafelson has been an attorney for 15 years and counting. 
  • He was an in-house state tax litigator GE and Microsoft, to name a few.
  • Paul is the founder of  EComAttorneys
  • He also started the Online Merchants Guild or OMG which advocates for the e-commerce community.

Sales Taxes

  • States have told sellers that they need to register to 50+ states in order to continue business.
  • California claims that sellers owe them back taxes – we have initiated litigation against California introducing changes in their tax laws.
  • Through lobbying and advocacy, Amazon now bears the burden of tax collection – except for 6 or 7 states.
  • It would be impossible for individual sellers to register to all states in order to continue business. Imagine what burden it will be to smaller sellers.
  • By the end of 2020, the goal is to have all states collecting taxes from Amazon, not from individual sellers.
  • Some states still aggressively going after legacy sellers for back taxes.
  • We are on the watch for laws popping up circumventing all these efforts.

Amnesty?

  • There was an amnesty program offered by a state saying that they will not go after you for back taxes BUT they will go after you for other taxes.
  • Tax amnesty programs can be shady.
  • Some other taxes just passed laws making changes so that they can start collecting from Amazon.
  • Amazon sellers are out-of-state and the states do not have interests in protecting out of state sellers.
  • It is not Constitutional nor appropriate to go after small sellers.

How to take on Amazon

  •  It is a bit of David and Goliath but they have a giant Achilles’s heel.
  •  Any tax lawyer can see this for what it is.
  • Three law firms are engaged in this case taking on Amazon in California.
  • Amazon didn’t want to pay the taxes or collect the taxes because  that way things are cheaper for them.

The Anti Trust Scenario

  • There is an ongoing investigation and Congress is looking at these issues.
  • Some issues being looked into: the buy box, the FBA dependency and a host of business practices that Amazon is engaged in.
  • One thing they have looked in to is how Amazon competes with sellers and using the data gathered from sellers in creating and marketing their products- in the end pushing smaller sellers out. 
  • Amazon no longer refers to themselves as Marketplace but Store.
  • We are lobbying in Congress to pass sales tax laws that will fix the problem on Amazon sales taxes.

The Chinese Trademark Issues

  • There is an upcoming trade where you need to have your product trademarked in China or else someone might take it away from you and block you from importing.

2020 Trends

  • 2020 is going to be a year of reconciling e-commerce and Amazon, where having your own website can be possible.
  • Amazon should not deny small sellers be independent – the focus is to increase the rights of e-commerce sellers.
  • All eyes are on the anti-trust issues – sellers should speak up! Connect with us through the EComAttorneys and OMG.

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