Why Is Sales Tax Charged Differently on Amazon and Barnes & Noble Purchases?

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Discussion Overview

The discussion revolves around the differences in sales tax charges on purchases made from Amazon compared to Barnes & Noble, focusing on the implications of physical presence and state tax laws. Participants explore the reasons behind tax exemptions for online purchases and the conditions under which sales tax is applied.

Discussion Character

  • Debate/contested
  • Conceptual clarification

Main Points Raised

  • Some participants note that Amazon does not charge sales tax on purchases, suggesting this may be due to a lack of physical presence in the buyer's state.
  • Others propose that shipping charges might offset the absence of sales tax.
  • It is mentioned that interstate mail order items typically do not incur sales tax.
  • Some participants argue that sales tax applies only to local purchases, and states generally do not tax out-of-state sales.
  • One participant states that if a company is headquartered in the buyer's state, they must charge sales tax, while companies without a physical presence are not authorized to collect it.
  • Concerns are raised about compliance, with one participant noting that many people do not report out-of-state purchases on their tax returns.
  • Questions arise regarding why Barnes & Noble charges sales tax, with some suggesting it may be due to their physical stores in the buyer's state.
  • A later reply mentions that Amazon's distribution centers complicate their tax obligations, as they claim these centers are operated by a subsidiary.

Areas of Agreement / Disagreement

Participants express differing views on the reasons for sales tax application, with no consensus reached on the specifics of tax laws or the implications for online retailers.

Contextual Notes

There are limitations regarding the understanding of state tax laws, the definitions of physical presence, and the nuances of compliance with tax reporting for online purchases.

ehrenfest
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I've noticed that there is never any tax on anything I buy from Amazon. How is this possible?
 
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Maybe the shipping charges offset the $$$.
 
All internet stores don't have tax...from what I've seen.

Don't know how they do it.
 
there's no tax on interstate mail order items/sales
 
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.
 
ehrenfest said:
I've noticed that there is never any tax on anything I buy from Amazon. How is this possible?

You only have to pay tax if the website is located in your state.

EDIT: Moonbear beat me to it, and explained it better.
 
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.
 
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
 
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?
 
  • #10
ehrenfest said:
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?

Their headquarters are in New York.

EDIT: I'm pretty sure...
 
  • #11
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.
 
  • #12
ehrenfest said:
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?

It's because they have stores in that state.
 

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