Language Selection

English French German Italian Portuguese Spanish

Days of tax-free Net shopping may be over

Filed under
Web

Those who believe that death and taxes are the only sure things in life have not spent much time with online retailers, who have largely avoided paying most sales taxes.

But that situation appears to be near an end.

Late last month, a California state appeals court found the bookseller Borders liable for $167,000 in taxes from April 1998 to September 1999 because the company had commingled the operations of its online subsidiary and its stores in that state. The ruling, along with other efforts by state tax collectors aimed at Internet sales, could signal that the era of tax-free online shopping is drawing to a close.

A Supreme Court decision in 1992 said that mail-order merchants, and, by extension, online retailers, need not collect taxes on behalf of their customers' local jurisdictions unless those customers are in a state where the business operates.

Traditional retailers have long complained that Amazon and others have largely avoided state tax collection and have bemoaned that such practices allow the online retailers and catalog companies to sell goods at lower prices. At the same time, government officials in the 45 states that levy sales taxes have lamented the forgone revenues, particularly since 2000, when Internet sales spiked and many local economies slowed.

According to Scott Brandman, a lawyer with the firm of Baker & McKenzie, which is representing Borders in the California case, the appellate court's decision "could be used by states to reach out to new levels they haven't reached out to before."

Brandman said the California court failed to account for the fact that Borders.com and Borders Group were separate corporate entities. Therefore, he said, states could rely on this decision to say that when online companies use an unrelated offline business to promote themselves, the online company would then have to collect taxes in states where the offline business operates.

That could, in theory, include the country's largest online retailer, Amazon.com, which now operates Borders' online store.

Borders had argued that because it set up a separate company to run its online operations--and that company had no offices or staff in California--it was not obliged to collect sales taxes from California residents, even though the company ran 129 Borders and Waldenbooks stores and a distribution center in that state.

The California court said that since Borders' California stores essentially acted as agents for Borders.com--by, among other things,

Rest of the Story.

More in Tux Machines

today's howtos

KaOS 2016.06 Moves the Distro to Linux Kernel 4.6, Adds Full-Disk Encryption

The developers of the KaOS Linux operating system have had the great pleasure of announcing the release and immediate availability for download of the KaOS 2016.06 ISO image with some very exciting goodies. First and foremost, the devs have decided to move the distribution from the long-term supported Linux 4.4 kernel series to Linux kernel 4.6, which makes it possible to fully automate the early microcode update. Furthermore, the default desktop environment has been migrated to the Beta of the upcoming KDE Plasma 5.7. Read more

Tiny Core Linux 7.2 Enters Development, First Release Candidate Is Out Now

The developers of one of the smallest GNU/Linux operating systems, Tiny Core, have announced that the next point release in the Tiny Core Linux 7 series, version 7.2, is now open for development. Tiny Core Linux 7.2 RC1 (Release Candidate 1) has been released today, June 25, 2016, and it lets early adopters and public testers get an early taste of what's coming to the final Tiny Core Linux 7.2 operating system in the coming weeks. Read more

Huawei CEO: Will keep using Android as long as it's open

He made the said comment in a Weibo post, where-in he also noted that Google's mobile OS has promoted the development of smartphones, which in turn has benefited consumers. Interestingly, he didn't say anything about whether or not Huawei is developing an in-house mobile OS - said to be called Kirin OS. His silence on the matter, though, can be taken as a confirmation of sorts, especially when his comment reflects the possibility of Google restricting the companies’ freedom with Android in future. Read more Also: Huawei CEO Comments On Rumors about its Independent OS