Anyone who either does business in multiple places, has customers in more than one state, or has ordered a product from a company in another state has dealt with this one: there’s no universal sales tax, and knowing who owes what to whom when those crossing-state-lines transactions takes place is a minefield.

OK, so actually, at the very bottom of the way taxes work it isn’t a problem at all. If you buy something you’re responsible for paying tax to the state (or even more granularly to the county or city) where you live. Not every state has a sales tax, though, and each jurisdiction that does has different ideas of what’s taxable, so the system that’s evolved over time is one where A) merchants who sell taxable items collect tax and pass it on to taxing jurisdictions and B) they collect their local taxes without regard for where the customers buying things live.

It’s a mess. It’s always been a mess. And until the Internet came along it was a mess that states liked because even though it’s the purchaser who owes the tax, sellers were acting as a very efficient unpaid tax collection force.

Then, we started buying from places we’d never visited. And if you live in New Jersey and buy something from either (located in Washington) or someone who was funneled business by Amazon and themselves weren’t in either Washington or New Jersey, the retailer didn’t collect tax. After all, as a resident of not-Washington I don’t owe taxes there, and since s/he isn’t selling from Washington neither does the vendor.

Since purchasers almost never report their out-of-state purchases and pay taxes on them at home, this caused a tremendous loss in tax revenue to all the states. And a few states have fought back. Colorado enacted a law that forced to put all their Colorado-based resellers out of business, for example. New York tried to force companies like Amazon to collect sales taxes for them, too. I’ve been telling you about the problem collecting out of state sales tax for years, and despite one jurisdiction after another passing laws that are constitutionally questionable, the parade of non-compliance has gone on. And on. And on.

The State of California and may have just put an end to the problem.

California was one of the states trying to force to collect sales tax on items originating in California but sold to people who don’t live there. And last week, and California struck a deal: California is not going to force to collect taxes for one year, and in exchange Amazon has “dropped their opposition” to the law requiring them to do so.

Think about that for a second and you’ll see what it really means. won’t ever really “drop their opposition” unless there’s a simple way to collect taxes, because once they agree to work within California’s law they’ll have a very hard time not working with other states as they pass identical laws. And the sheer burden of tracking and collecting taxes in fifty states and an untold number of counties and cities where Amazon has no presence would be HUGE.

Meaning that Amazon has to root—and now lobby—for a national sales (or similar) tax to replace the individual state taxes.

Agreeing to play this game with California is the reverse of what telephone companies deal with collecting fees like The Federal Subscriber Line Charge. Telephone companies collect taxes in each state in which they actually operate. There IS NO “Federal Tax” on phone service. And it’s a mess; phone companies have to explain the matter to customers who don’t understand the fees they pay, and most often these phone-company-imposed, collected, and kept fees are either explained as Federal Taxes or phone company employees imply that that’s what they are. But at least there are separate administrative teams in each state.

Having to collect sales taxes in jurisdictions where you don’t operate would be even worse. couldn’t possibly really be OK with that, and now they have no choice but to try and force a national tax to replace the current system. Or even better, national legislation specifically prohibiting what states like California, Colorado, and New York are trying to do.

But here’s the real problem:

Amazon might hate the idea, but they could handle it. If there was suddenly a requirement for all retailers to collect sales tax on behalf of all jurisdictions, small companies would go away; the burden is simply too large. But would be fine.

THERE’S business change. And you need to make noise to stop it from happening.

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