August 30, 2011 archive

Aug 30 2011

Wal-Mart.com Doesn’t Collect California Sales Tax But Pushing Online Sales Tax Legislation on Amazon.com

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Wal-Mart seems a little hypocritical, no?

The world’s largest retailer, Wal-Mart Stores Inc., has been leading the attack against Internet giant Amazon.com Inc. for refusing to collect sales taxes on online purchases. But Wal-Mart doesn’t always collect sales tax on items sold on its site, either.

The Walmart.com site, based in Brisbane near San Francisco International Airport, offers hundreds of products from a third-party retailer, CSN Stores in Boston, that are sold without collecting taxes when state residents buy them.

Wal-Mart insists that it’s not its responsibility to require companies that sell products through its site’s Marketplace Retailers program to collect California sales tax, even though the billing and the credit card transactions take place on Walmart.com.

But state Board of Equalization board member Betty Yee said she believes that Wal-Mart does have an obligation under the California law that took effect July 1 to collect the taxes.

“As a leader in trying to enforce the new [law], they also should be leading the charge in terms of being very clear about the application of the tax on all transactions with California consumers,” Yee said.

Yee has asked board staff to determine whether Wal-Mart should be collecting the tax. Wal-Mart spokesman Daniel Morales said that if a vendor doesn’t ask the company to collect the tax, it doesn’t do so.

Oh! I, so love TURF WARS in business. Now, we see the problem with taxing the internet and the problem with legal nexus for online sales.

The Congress should act, help the states even the playing field and facilitate collection. But, will they?

Probably, not anytime soon. So, former Amazon.com Associates like me are stuck, unless the California Amazon Tax referendum goes forward and the California law is repealed.

Wal-Mart’s obligation to collect sales tax for CSN sales appears to be at least as strong as Amazon’s obligation, said Richard D. Pomp, an expert in state taxes at the University of Connecticut law school.

“What you’ve got is a company with nexus, physical presence in California, acting as an agent for an out-of-state seller,” Pomp said. “That certainly seems to create nexus in my mind.”

Legal theories aside, Pomp said he was surprised that Wal-Mart would try to avoid the same California law it’s been campaigning to pass and enforce against its Internet rivals.

Wal-Mart should avoid getting into a dispute with California “at the same time it is at war with Amazon,” he said.

The referendum end-run legislation AB 155 is supposed to be heard today in the California State Senate. Let’s see if the Democrats and Wal-Mart have the votes.

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