Paul Rafelson talks Sales Tax, Paul is from a Law firm focused on Amazon Sellers and a founder of the On-line Merchants Guild trade organisation focusing on advocacy and eCommerce Sellers.
Number 1 issue Amazon Sellers face is Tax. Income, Sales Taxes and compliances.
Factor in the time it takes (10hrs a month or more) for this tax problem and it’s hard to sell on Amazon.
As an association, we as Sellers need this trade association. We certainly have the numbers to create a huge powerful trade association to take on policy and law with a big lobby.
Amnesty programme is a Wolf in Sheep’s clothing, not what it looks. It was a sham.
They do not look at this as a collective burden that stops Sellers being able to sell.
They said they would forgive your back-Sales tax if you sign-up now.
Some of the advisers out there were telling people “you have Nexus and you must collect”
They were giving very confusing statements that made you think you need to pay.
Those people who registered are in a nightmare of both Sales and Income Tax from multiple states. It was a real bait and switch…
You’re already Paying Tax
If you’re living in most States you’re already paying income tax most likely in your Home state. It’s about re-distributing the pie, you have to file tax returns and pay minimum fees…
Mississippi could say you owe them $2k but getting a lawyer to file the paperwork can cost you $2-3k easily!
Your income tax burden goes up, then registering with the Secretary of State it can cost you $200 per month as a bill…..and people are getting hit with this after being registered for years but no-one told them about this charge!
Tax Treaties Article 5 says you don’t need to pay income tax in the USA with FBA alone. You file a treaty and you’re okay. Some Supreme Courts rulings are now saying treaties don’t apply at State and Local Level – so you will have to file State Income Tax nad therefore prepare proper Income Tax returns and so now you’re selling State Income Tax and have the additional costs of producing this adding 4-5% to your costs
It’s a nightmare for Sellers
Wayfair’s Decision – Supreme Court Ruling (June 2018)
After the Amnesty we had the court case.
The big sales tax case covering physical presence Nexus which has been around since 1959.
The Quell case in 1992 is the one people have relied on saying there wasn’t a physical presence
Wayfair tried to state it is really hard to collect and said it’s too hard to do. The Supreme Court said it was nonsense and thought it was ridiculous.
The ruling was meant to stop large firms like Wayfarer and not to let the States go after Sales Tax.
The reason they brought the case against Wayfair was because they knew they would win and get a decision on the grey around physical presence.
The case has really been mis-interpreted on purpose and they didn’t even need to do this to get Wayfair as they already do enough in the state to assert Nexus against them.
Amazon Sales Tax case in New York
Amazon in New York in 2012-13 when NY said they had Nexus because people in NY had blogs with links to Amazon to sell Battle Star Galactica products and that gives Amazon Nexus.
This decision was twisted to a mandate for states to go after small sellers and it’s not true.
They did not say the 200 transactions test of $100,000 was allowed. They said it seemed like it would be okay and the reason is the optimism the court had that software was coming on-line t make it easy to collect.
But that hasn’t happened and the court made it clear a case could be brought to challenge these laws as the States haven’t made it easy and that there are other ways for States to do this that doesn’t burden inter-state commerce.
The Marketplace calls where States are passing laws to say that Amazon and other marketplaces have t collect Sales Tax. Amazon prefers this approach as it takes the pressure off the potential back-tax liabilities off of them.
This is the Amazon lobby preferred way to do it if tax-free is not going to happen.
That’s why individual seller tax Laws is unconstitutional.
The States don’t want to force Amazon to do it as they don’t want to be on Amazon’s bad list, they want Amazon to bring in the jobs to their states.
Within the last 12 months, out of 45 Collecting States Amazon is listed for 12 States now.