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How does amazon avoid taxes?

  1. Jun 29, 2008 #1
    I've noticed that there is never any tax on anything I buy from Amazon. How is this possible?
  2. jcsd
  3. Jun 29, 2008 #2
    Maybe the shipping charges offset the $$$.
  4. Jun 29, 2008 #3
    All internet stores don't have tax....from what I've seen.

    Don't know how they do it.
  5. Jun 29, 2008 #4
    there's no tax on interstate mail order items/sales
  6. Jun 29, 2008 #5


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    They don't have a physical store in your state. If your state expects you to pay use taxes of anything purchased out of state, you still owe taxes on it. I'm not sure if anyone living in the state where they are headquartered would have to pay taxes...not a physical storefront, but that's the state they are selling from.
  7. Jun 29, 2008 #6
    You only have to pay tax if the website is located in your state.

    EDIT: Moonbear beat me to it, and explained it better.
  8. Jun 29, 2008 #7
    Sales tax only applies if you are buying something locally. Normally states don't apply sales tax on out of state sales. If they did, then Amazon would relocate and the state would lose a bunch of other taxes.
  9. Jun 29, 2008 #8


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    If the company is headquartered in your state (and thus pays taxes in your state), then Amazon must charge you sales tax directly. If the company is not headquartered in your state, they are not authorized to collect sales taxes. Instead, you are supposed to report these sales on your tax returns, and pay sales tax on them at that time.

    Of course, in practice, no one ever does this.

    - Warren
  10. Jun 29, 2008 #9
    So, how come I had to pay sales tax when I ordered something on barnes and nobles website? Does that mean they are headquartered in the state where I shipped the item? Or is it because they have stores in that state?
  11. Jun 29, 2008 #10
    Their headquarters are in New York.

    EDIT: I'm pretty sure...
  12. Jun 29, 2008 #11


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    Actually amazon are in trouble for this at the moment - you have to pay sales tax if you have a physical presence in that state.
    So for instance if you buy a Mac form the online store but live in New York you pay tax because apple has a mac shop in New York.
    Amazon claim that their distribution centres aren't part of their company becaue they are run by a wholly owned subsiduary - and so don't have to collect sales tax.
    The most likely out come is that they will simply close these centres (or threaten to) and open them in more accomodating states.
    Sales tax really needs a re-think for online sales.
  13. Jun 29, 2008 #12


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    It's because they have stores in that state.
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