Amazon has made deals with all sales tax states to collect tax on its sales. But now South Carolina, having caught the big fish, gets greedy and goes for small businesses to fund their tax-and-spend ways.
Jeff Bezos, Chairman and CEO of Amazon.com, introduces the Kindle Fire at a news conference, Wednesday, Sept. 28, 2011 in New York. The e-reader and tablet has a 7-inch (17.78 cm) multicolor touchscreen. (AP Photo/Mark Lennihan)
You see, sales taxes are not owed by the seller. They are owed by the buyer, and the seller merely acts as an agent of the state to collect and remit those taxes. In the Quill Supreme Court case, the court ruled that the states don’t have the authority to order a business to collect sales tax unless that business has a ‘nexus’ within the state. Amazon, as it’s developed faster and faster delivery, has built up such a presence everywhere at this point.
However the numerous small, independent businesses that sell their wares on Amazon haven’t. And it’s sales by those businesses that South Carolina is now suing over. Says CNBC:
In June, South Carolina filed a complaint alleging that Amazon failed to collect taxes on sales made by third-party merchants on the company’s marketplace. These are products where Amazon is not the seller, but rather is connecting other businesses to consumers and providing the payment processing for the transaction as well as some customer support.
The state claimed that for the first quarter of 2016, Amazon owes $12.5 million in taxes, penalties and interest, an amount that “will continue to accrue until this matter is resolved.”
This is an absurd claim and if the courts don’t slap this down, every small business in America that sells products online is in serious trouble. Our economy will be harmed by this if something isn’t done. The whole reason we ban the states from regulating interstate commerce, is that they pulled ridiculous stunts like this during the Articles of Confederation era, and we had to put a stop to it.
We can’t have states targeting trade. That’s not how this works. That’s not how any of this works. We can’t have Internet commerce if any state can jump in on out of state businesses. South Carolina must lose this lawsuit.