Rare Book Monthly

Articles - November - 2013 Issue

A Loss for Internet Sales Tax Collectors

Originally part of the problem, Amazon now want to be part of the solution.

Another wrench was thrown in the works of those who are attempting to force internet retailers to collect out-of-state sales tax. Two years ago, Illinois attempted to force out-of-state retailers with over $1 million in annual sales, though having only the most tenuous of connections to Illinois, to collect that state's sales tax. Now, the Illinois Supreme Court has said "no."

 

The rush to charge sales tax on internet purchases can be traced to the company that was born in books - Amazon.com. Of course, books are only a small part of what this internet behemoth now sells. States, which depend on sales tax for much of their income, looked longingly at Amazon. If only there was a way to make them collect sales tax from customers within their borders. For the most part, there was no way.

 

Long ago, the U.S. Supreme Court ruled that an out-of-state retailer could only be forced to collect a state's sales tax from in-state customers if they had a “nexus” with the state. Their conclusion was based on the Constitution granting the federal government the exclusive right to regulate interstate commerce. “Nexus” would provide enough contact between retailer and state to make the transaction intrastate rather than interstate commerce, subject to state regulation. Generally, “nexus” was considered to be some sort of in-state presence, such as a sales office, employees, a warehouse, or, of course, a store. Most internet retailers, like the direct mail companies that preceded them, have no such presence. They take and ship orders from outside of the state. There is no nexus, so there is no requirement to collect sales tax. That is why most internet orders you place do not have a sales tax charge.

 

In recent years, some states have tried to define “nexus” more broadly so as to be able to demand the collection of tax. Illinois was one such state. They passed what has aptly become known as the “Amazon Law.” It declared so-called in-state “agents” to in effect be Amazon employees, creating nexus. Amazon has such “agents” all across the country. These are people who run their own websites and send leads to Amazon in return for a commission. They are not Amazon employees, not what one might traditionally think closely enough related to Amazon to create a “nexus.”

 

The Illinois Supreme Court struck down the “Amazon Law,” though interestingly enough, not on constitutional grounds. The Illinois Court cited the relatively recent Internet Tax Freedom Act of 2000 for its decision. That act prohibits discriminatory taxation on electronic commerce. Requiring taxes be collected because of advertising posted online by “agents,” but not because of advertising placed on television or in print, it ruled was internet discriminatory. The agent/nexus issue was left to be decided another day.

 

The last time the U.S. Supreme Court visited this issue, it lay down a route to states requiring out-of-state retailers to collect sales taxes on all transactions with customers located within their state. Since the federal government has the constitutional authority to regulate commerce, it could pass a law requiring out-of-state retailers to collect sales taxes all across the country. That, they implied, would pass constitutional muster. Naturally, a coalition of state governments and “Main Street” retailers immediately came together to induce Congress to pass such a bill. They helped to write it, now known as the Marketplace Fairness Act of 2013. Oddly enough, one of its supporters is the company whose existence, and repeated fight not to be compelled to collect sales taxes, led to this whole situation – Amazon. As Amazon has grown, it has opened warehouses in many states across the country to save time and money. It is already forced by the old “nexus” standard to collect sales taxes in many states. It now finds itself at the same competitive disadvantage as “Main Street” retailers versus internet companies with a presence in just one state.

 

The Marketplace Fairness Act of 2013 has already passed the Senate handily, on a 69-27 vote. One might think anti-tax conservatives would oppose the bill, but it drew a wide, nonpartisan coalition. Pressure from local, “Main Street” retailers, who believe they are at a competitive disadvantage, swayed a lot of votes. Technically, it isn't a new tax anyway, as each sales tax state also has a use tax, which states you are supposed to assess yourself and pay a “use tax” in the same amount as your local sales tax when you buy from a retailer who does not collect the sales tax. However, very few people actually pay this tax. Maybe even you.

 

The President has pledged to sign the bill. That leaves the House of Representatives, where the bill is currently attempting to work its way through the morass which is their bureaucracy. Sometimes bills that would pass if voted up or down never make it to the floor. What happens with this one remains uncertain. Interestingly, polls have shown a majority oppose the bill, with a particular concentration of young people, who undoubtedly are prime internet consumers. “Main Street” may be a foreign country to many of them. We will have to wait to determine the outcome, but estimates are that $24 billion in revenue for the states hangs in the balance.

Rare Book Monthly

  • Sotheby’s
    Modern First Editions
    Available for Immediate Purchase
    Sotheby’s, Available Now: Winston Churchill. The Second World War. Set of First-Edition Volumes. 6,000 USD
    Sotheby’s, Available Now: A.A. Milne, Ernest H. Shepard. A Collection of The Pooh Books. Set of First-Editions. 18,600 USD
    Sotheby’s, Available Now: Salvador Dalí, Lewis Carroll. Alice's Adventures in Wonderland. Finely Bound and Signed Limited Edition. 15,000 USD
    Sotheby’s
    Modern First Editions
    Available for Immediate Purchase
    Sotheby’s, Available Now: Ian Fleming. Live and Let Die. First Edition. 9,500 USD
    Sotheby’s, Available Now: J.K. Rowling. Harry Potter Series. Finely Bound First Printing Set of Complete Series. 5,650 USD
    Sotheby’s, Available Now: Ernest Hemingway. A Farewell to Arms. First Edition, First Printing. 4,200 USD
  • Bonhams, Mar. 22 – Apr. 2: A RUTH BADER GINSBURG BEADED JUDICIAL COLLAR. $80,000 - $120,000
    Bonhams, Mar. 22 – Apr. 2: ONLY KNOWN COPY OF THE ONLY BOOK BY THE REMARKABLE EVE ADAMS. $8,000 - $12,000
    Bonhams, Mar. 22 – Apr. 2: A COMPLETE RUN OF VISIONAIRE MAGAZINE THROUGH 2010. $6,000 - $9,000
    Bonhams, Mar. 22 – Apr. 2: LAW REVIEW OFFPRINT SIGNED AND INSCRIBED BY RUTH BADER GINSBURG. $3,000 - $5,000
    Bonhams, Mar. 22 – Apr. 2: META REBNER'S WORKING SCRIPT OF THE LOVED ONE. $1,500 - $2,000
    Bonhams, Mar. 22 – Apr. 2: A KATHY GROVE PORTRAIT OF CYNDI LAUPER FOR THE FEBRUARY 1989 DETAILS COVER. $800 - $1,200
    Bonhams, Mar. 22 – Apr. 2: A PLASTIC COAT BY MILLIE DAVID FEATURED IN SOHO NEWS STYLE SECTION, FROM THE COLLECTION OF ANNIE FLANDERS. $500 - $700
    Bonhams, Mar. 22 – Apr. 2: A RUTH BADER GINSBURG JEWELRY BOX. $600 - $900
    Bonhams, Mar. 22 – Apr. 2: A SET OF JONI MITCHELL LYRICS FOR "IF I HAD A HEART." $2,000 - $3,000
  • 19th Century Shop
    Catalogue 198 just published
    19th Century Shop. Darwin and Wallace, first printing of the first paper on natural selection
    19th Century Shop. Shakespeare’s Poems, first collected edition
    19th Century Shop. Walt Whitman portrait inscribed with a Leaves of Grass poem
    19th Century Shop. Major Elizabeth Barrett Browning manuscript notebook
    19th Century Shop. Spock's Baby Book, original MS
    19th Century Shop. Cellarius, Harmonia Macrocosmica, the great celestial atlas
  • Potter & Potter Auctions
    How History Unfolds on Paper:
    Choice Selections from the Eric C. Caren Collection
    Part IX
    April 18, 2024
    Potter & Potter, Apr. 18: [RUTH, George Herman “Babe” (1895-1948)]. Signed photograph. Circa 1930s. 191 x 248 mm. $1,500 to $2,500.
    Potter & Potter, Apr. 18: HARRISON, Benjamin. Document signed (“Benj Harrison”) as governor of Virginia, certifying the service of Daniel Cumbo, a Black Revolutionary soldier. $6,000 to $9,000.
    Potter & Potter, Apr. 18: ONE OF THE FIRST PRINTED ANNOUNCEMENTS OF THE DECLARATION OF INDEPENDENCE. $4,000 to $6,000.
    Potter & Potter Auctions
    How History Unfolds on Paper:
    Choice Selections from the Eric C. Caren Collection
    Part IX
    April 18, 2024
    Potter & Potter, Apr. 18: FIRST PRINTING OF LINCOLN’S IMMORTAL GETTYSBURG ADDRESS. $4,000 to $6,000.
    Potter & Potter, Apr. 18: HIGHLY IMPORTANT MORMON ARCHIVE. ALLEY, George. Archive of 23 Autograph Letters Signed by Mormon Convert George Alley to His Brother Joseph Alley. $10,000 to $20,000.
    Potter & Potter, Apr. 18: [AVIATION]. [ARMSTRONG, Neil A.] Aviation Hall of Fame Gold Medal MS64 NGC, Awarded to Neil Armstrong in 1979. $2,000 to $3,000.
    Potter & Potter Auctions
    How History Unfolds on Paper:
    Choice Selections from the Eric C. Caren Collection
    Part IX
    April 18, 2024
    Potter & Potter, Apr. 18: NEWLY DISCOVERED FIRST PRINTING OF "WITH MALICE TOWARDS NONE... " FROM THE ONLY NEWSPAPER ACTUALLY ALLOWED TO PARTICIPATE IN LINCOLN’S SECOND INAUGURAL PROCESSION. $4,000 to $8,000.
    Potter & Potter, Apr. 18: THE MOST IMPORTANT GEORGE WASHINGTON DOCUMENT IN PRIVATE HANDS; GEORGE WASHINGTON’S COMMISSION AS COMMANDER IN CHIEF, 1775, ONE OF ONLY TWO ORIGINALS. $150,000 to $250,000.
    Potter & Potter, Apr. 18: A VERY RARE ACCOUNT OF BLACKBEARD’S DEATH AND ONE OF THE MOST IMPORTANT PIRATE ITEMS EXTANT. $3,000 to $5,000.
    Potter & Potter Auctions
    How History Unfolds on Paper:
    Choice Selections from the Eric C. Caren Collection
    Part IX
    April 18, 2024
    Potter & Potter, Apr. 18: EDISON, Thomas. Patent for Edison’s Improvements on the Electric-Light, No. 219,628. [Washington, D.C.: U.S. Patent Office], 16 September 1879. $2,000 to $3,000.
    Potter & Potter, Apr. 18: [VIETNAM WAR]. The original pen used by Secretary of State William P. Rogers to sign the Vietnam Peace Agreement, Paris, 27 January 1973. $10,000 to $15,000.
    Potter & Potter, Apr. 18: SONS OF LIBERTY FOUNDER COLONEL BARRÉ ANNOTATED TITLE-PAGE, “WHICH OUGHT TO ROUSE UP BRITISH ATTENTION”. $4,000 to $6,000.
  • Forum Auctions
    Books, Manuscripts and Works on Paper
    28th March 2024
    Forum Mar. 28: [Langland (William)]. The vision of Pierce Plowman, nowe the seconde time imprinted..., Roberte Crowley, 1550. £8,000 to £10,000.
    Forum Mar. 28: [Shakespeare (William)]. [Comedies, Histories, and Tragedies], second folio edition, [by Tho.Cotes, for Robert Allot], [1632]. £30,000 to £40,000.
    Forum Mar. 28: Bible, Czech Biblia Bohemica, first complete Bible printed in the Czech vernacular, Prague, August 1488. £30,000 to £40,000.
    Forum Auctions
    Books, Manuscripts and Works on Paper
    28th March 2024
    Forum Mar. 28: Shabthai Tzvi.- Collection of four printed and illustrated broadsides detailing the appearance, rise and fall of the false messiah, Shabthai Tzvi, Augsburg, 1666-67. £40,000 to £60,000.
    Forum Mar. 28: Leaf from the Beauvais Missal, in Latin, illuminated manuscript on parchment, [Northern France (perhaps Beauvais or Amiens)], [fourteenth century (c.1310)]. £4,000 to £6,000.
    Forum Mar. 28: Aubrey (John). [Remaines of Gentilisme and Judaisme], manuscript in English, Latin and Greek, [c. 1693]. £30,000 to £50,000.
    Forum Auctions
    Books, Manuscripts and Works on Paper
    28th March 2024
    Forum Mar. 28: Byron (George Gordon Noel, Lord). Poems on Various Occasions, first edition, Harriet Maltby's copy, Newark, Printed by S. & J. Ridge, 1807. £30,000 to £40,000.
    Forum Mar. 28: Tolkien (J.R.R.) The Hobbit, first edition, second impression with dust-jacket, 1937 [but 1938]. £7,000 to £10,000.
    Forum Mar. 28: Blake (William).- Thornton (Robert John). The Pastorals of Virgil, 2 vol., engraved plates by William Blake, 1821. £8,000 to £12,000.
    Forum Auctions
    Books, Manuscripts and Works on Paper
    28th March 2024
    Forum Mar. 28: America.- Mount (William J.) & Thomas Page. The English Pilot…, [bound with] The Fourth Book, describing The West Indies Navigation from Hudson's-Bay to the River Amazones, 1721. £20,000 to £30,000.
    Forum Mar. 28: Oldfield (Henry Ambrose), Rajman Singh Chitrakar & others. An album of 160 photographs and 13 original artworks, (1833-1919), [c. 1850s-1880s]. £20,000 to £30,000.
    Forum Mar. 28: Audubon (John James) [and William MacGillivray]. Ornithological Biography…, 5 vol., first edition, presentation copy inscribed by Audubon, Edinburgh, 1831-49 [i.e. 1831-39]. £10,000 to £15,000.

Article Search

Archived Articles

Ask Questions