Originally published October 4, 2011*, State Legislative
Developments
Note A: For more on the "Main Street Fairness" legislation, see my two prior Main Street posts:
“It was the best of times, it was the worst of times, it
was the age of wisdom, it was the age of foolishness, it was the epoch of
belief, it was the epoch of incredulity, it was the season of Light, it was the
season of Darkness, it was the spring of hope, it was the winter of
despair,....., in short, the period was so far like the present period, that
some of its noisiest authorities insisted on its being received, for good or
for evil, in the superlative degree of comparison only.”
And like this quote, from Charles Dicken’s “A Tale of Two
Cities”, I bring you today “A Tale of Two State 'Amazon Law' Updates”. One for
whom the battle was too great, who realized it had expected too much, too
quickly; and another just embarking on the dream of internet sales tax
collections. Two states. Within a day of each other, one repeals its “Amazon
Law”, while another introduces “Amazon” legislation.
California’s “Amazon Law” is Temporarily Repealed
Okay, we knew it would probably happen! That's
right, just in case you haven’t heard, California’s Governor Brown signed
compromise legislation, AB 155, into law on September 23, 2011. If you're not familiar with these
developments, I invite you to read my recent prior post “California's "Amazon Law" Drama Continues: An Update on Recent Developments", for the dramatic details that led to the “California-Amazon” compromise.
Although I cover the provisions of AB 155 in that post, I’ll
summarize a few key points here:
- AB
155 temporarily and retroactively repeals
the provisions of ABX 1, California’s “Amazon Law”.
- This
repeal will remain in effect until either September
15, 2012 or January 1, 2013 depending on whether
a federal solution is passed by July 31, 2012, and if passed, depending on
whether California elects to implement the federal solution. (I’ve
seen many news reports that simply state that sales tax will not be due on
internet purchases until September 15, 2012 but fail to mention the
possibility that the repeal may last until January 1, 2013.)
- This
repeal impacts all out-of-state (“remote”) retailers, not just Amazon.com,
and gives these on-line retailers a temporary reprieve from collecting
sales tax from California purchasers.
Although the press coverage has slowed on the
“California-Amazon” saga, the latest reports are that Amazon has officially
confirmed that it will indeed begin collecting sales tax no later 2013.
This recent Wall Street Journal article, “Amazon to Collect Sales Tax by 2013”, quotes Jeff
Bezos, Amazon’s CEO, as saying that Amazon will begin collecting sales tax by
2013. He also confirms that Amazon plans to add facilities in California
and that the Company will not challenge the law or close its facilities to
avoid its sales tax collection requirement. I suppose for now, we’ll just
have to wait and see what really happens!
Michigan Introduces “Amazon Legislation”
Now with all the time, effort, energy and taxpayer resources
spent on California’s failed attempt to get its “Amazon Law” in effect and
enforceable immediately, you would think other states might think twice about
introducing “Amazon” legislation.
Not so, my friends. On September 22nd, Michigan
became the latest state to introduce “Amazon” legislation. Michigan H.B. 5004, contains the typical, web-linking nexus language
seen in other "Amazon Laws” and states that a seller "is presumed to
be engaged in the business of making sales at retail of tangible personal
property in this state if the seller enters into an agreement with 1 or more
residents of this state under which the resident, for a commission or other
consideration, directly, or indirectly refers potential customers, whether by a
link on an internet website, in-person oral presentation, or otherwise, to the
seller, if the cumulative, gross receipts from sales by the seller to customers
in this state who are referred to the seller by all residents of this state
with such an agreement with the seller is greater than $10,000 during the
immediately preceding 12 months.”
But Michigan H.B. 5004 also includes "affiliate nexus"
language, further expanding the definition of a “retailer engaged in business
of making sales at retail” to include retailers who are part of a controlled
group, as defined in I.R.C. 1563(A), that include “affiliates” (controlled
group members) with facilities and employees in the state that perform various
types of services (advertising, delivery, installation, maintenance, etc.)
which promote or facilitate a remote retailer’s Michigan sales, or which use
trademarks and similar intangibles in Michigan that are substantially similar
to those used by the remote retailer, or which allow the remote retailer’s
customers to pick-up or return on-line purchased merchandise from an
affiliate’s Michigan facility, or which conduct any significant “market
enhancing” activity in Michigan that benefits the remote retailer. Expansive
indeed!
A few more points on Michigan’s “Amazon” legislation; the
legislation contains a “rebuttable” provision, and if passed, Michigan’s
“Amazon Law” would go into effect 30 days after the legislation is enacted.
Sylvia's Summation
In conclusion, here’s one more interesting note on the
Michigan development. Michigan, unlike California, is a full-member
Streamlined Sales & Use Tax Agreement (“SSUTA”) state. As I've mentioned in my prior posts on the federal Main
Street Fairness legislation, if enacted, the federal Main
Street legislation would grant full-member SSUTA states the legal authority to
require remote retailers (other than those meeting the small seller exception)
to charge and collect sales tax. (See Note A) As
I’ve mentioned before, the federal Main Street Legislation
would not impose a national sales tax (as some media reports
imply), and so a federal law could operate in conjunction with independent
state “Amazon Laws”. But if a state is already a SSUTA full-member,
having a separate “Amazon Law” might seem redundant. California, on the
other hand, would need to apply for and become a SSUTA member in order to enjoy
the benefits of the federal Main Street legislation. So
why are states continuing on this trend? They need the sales tax revenues – no
question about that! Perhaps they just can’t sit back and wait for a federal
solution. One thing that is certain, it will be interesting indeed to see
how things play out over the next year! It's sure to be a novel worthy
ending!
Note A: For more on the "Main Street Fairness" legislation, see my two prior Main Street posts:
“Main Street Fairness Act. Is SST the Silver Bullet?”, SalesTaxSupport.com, 8/10/11;
“Can the Main Street Fairness Act Stop the Sales-Tax Madness?”, AllBusiness.com, 8/22/11
_______________________________________________________________
*The above post is based on Sylvia Dion's SalesTaxSupport.com post, "A Tale of Two States - The "Amazon Law" Saga Continues", published October 4, 2011. The content from that post has been re-produced in the above post for the benefit of the "Buzz's" readers.
For more about Sylvia's E-Commerce/Internet Sales Tax contributions to the SalesTaxSupport.com blog see the side-bar text box.
For more about Sylvia's E-Commerce/Internet Sales Tax contributions to the SalesTaxSupport.com blog see the side-bar text box.
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