# Tax on ebooks... Is it coming???



## BEAST (Mar 31, 2012)

So I was checking out all my little news sites before dinner and ran across this article:

http://finance.yahoo.com/news/get-ready-to-pay-sales-tax-on-amazon.html

This may be a dumb question but it comes from my out of sight out of mind thinking. I don't live in any of the states that Amazon collects state sales taxes. So I don't know if they are already collecting taxes on ebooks already. So, if you are in Kansas, Kentucky, New York, North Dakota, Texas or Washington do you pay taxes on ebooks? Heck, do you pay sales taxes on mp3s? These are "non tangible" products so I was wondering.

Assuming ebooks are not taxed, does anyone think the taxes, if they come, will have any impact on, well, anything? Sales? Pricing strategies? Consumer's attitudes on ebook prices?


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## Jana DeLeon (Jan 20, 2011)

I am in Texas and yes, I pay tax on ebook purchases. It doesn't affect my choices as the only choice is buy or don't buy. If I want it, I buy it and the government takes their pint of blood.


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## Tessa Apa (Apr 8, 2011)

Jana DeLeon said:


> If I want it, I buy it and the government takes their pint of blood.


me too! If I want a book, nothing stops me!


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## Terrence OBrien (Oct 21, 2010)

Amazon sales to Kansas are taxed. Books are no different. Sales taxes definitely reduce unit sales volume. Amazon released their projections a few months back. I forget exactly what the numbers are.  In general, add tax to an eBook and it sells fewer copies. Authors will make less with sales tax than without it. It's a price increase to consumers.


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## Ann in Arlington (Oct 27, 2008)

Whether or not Amazon collects tax on ebooks depends on (1) whether the state taxes ebooks, (2) whether the publisher/Amazon (depending on whether or not the 'agency model' applies) is deemed to have a 'nexus'.  

Amazon must collect sales tax on some books as they're sold by publishers under the agency model in states that tax electronic downloads.  

Some states don't tax electronic downloads, so there's no tax collected at all.  

Note that digital items may be treated differently to physical items in a state's tax code.


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## charlesatan (May 8, 2012)

Depends on your state/country.

UK has eBook tax for example.

No tax here in the Philippines, but Amazon is charging us $2.00 on every title (including $0.99) due to "Whispersynch" charges.


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## Ann in Arlington (Oct 27, 2008)

charlesatan said:


> No tax here in the Philippines, but Amazon is charging us $2.00 on every title (including $0.99) due to "Whispersynch" charges.


I'd guess that has to do with fees imposed on Amazon by the Phllippines for the right to sell at all, or possibly additional costs for 3G service overall. In other words, they have greater overhead due specifically to their right to do business in that country so they add fees to cover some of those costs that are NOT present elsewhere.


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## Guest (Jul 19, 2012)

I don't shop online to avoid sales tax. I shop online because it is easier than driving to the mall and having to deal with crowds. I've never not bought something over 7% sales tax. 

Amazon's projections were, of course, calculated by Amazon. I would suspect they would not release projections showing no difference or an increase in sales.   I also think the projections are assuming that, if sales tax is collected, people will just shop locally for items. However, Kindle books can't be bought locally, so if someone wants books for their Kindle they have to shop online (generally Amazon). 

I also think that in most cases it is invisible. You won't see the sales tax until the end of the transaction. It's like shipping charges calculated at the end of the purchase. If someone is prepared to download a 99 cent book and after tax it is 1.05, how many people suddenly say "Oh, I can't afford that!" and will cancel the transaction?


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## Jana DeLeon (Jan 20, 2011)

Bards and Sages (Julie) said:


> I don't shop online to avoid sales tax. I shop online because it is easier than driving to the mall and having to deal with crowds.


Boy, isn't that the truth!


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## Ann in Arlington (Oct 27, 2008)

I think it's really important to make clear the distinction between digital 'stuff' and physical 'stuff'.  In all states that have a sales tax, physical stuff is already subject to tax. . .the only thing is an online retailer is not obliged to collect it on behalf of the state unless they have a physical presence in the state.  Such as a warehouse.  

Some states have taken the position that having affiliates in a state means the company has a physical presence; Amazon has fought that position.  BUT, they are interested in being able to deliver to almost all of their customers within a day if that's what the customer wants.  To do that, they'll HAVE to have real physical locations in almost every state. . . .hence their apparent change of position on collecting the tax.  It doesn't mean they've agreed with the states previous position re: affiliates; it means they plan to build a warehouse there anyway.

DIGITAL stuff is, arguably, different.  Not every state taxes digital downloads.  Virginia doesn't for example.  And, as of now, Amazon also has no physical presence in the state.  So they are not obliged to collect the use tax I owe to the state on physical items either.  BUT, Amazon have entered into an agreement with Virginia, to begin collecting sales tax on their behalf starting in 2013 -- not coincidentally, they're building a couple of new distribution centers in the state about then, too!  But this will NOT affect the taxability of digital downloads, only physical items ordered.  

And, frankly, that's o.k. by me. . . .I'd much rather just pay the tax at time of sale than keep track and pony up at the end of the year.  I realize, of course, that most people don't bother with reporting and paying on their own.  Which is precisely why the states want the big on line retailers to collect it for them. . .they're losing a LOT of revenue because there's no good way to know what residents have purchased out of state without paying sales tax.   

Of course, physical retailers want them to have to collect it, because they feel like they're at a disadvantage.  But I agree with Julie that there probably aren't a lot of people who shop on line to avoid the tax -- they do it for convenience.  And, you know what?  If there's a distribution center close enough to me that I can order a thing this morning at 10 and have it delivered to my house this afternoon at 4. . . . .well, let's just say there are a lot of people who'd rather do that than get in their car and go pick it up themselves. . . . especially as you might not even know if the store has exactly what you're looking for in stock.  I mean, I might be in the mood to just do some shopping -- but I might also be more in 'search and destroy' mode: I want what I want and don't have time to be distracted by other stuff.


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## Atunah (Nov 20, 2008)

All I know that I, being from Texas, only paid taxes on big 6 agency ebooks up until July 1st. So I guess I got primed on paying for ebooks that way already. A 7.99 book, came out to I think 8.64. 

Now of course I pay tax on every ebook, every item that is shipped directly from Amazon. I hate it, but there isn't anything I can to about it. 

Oddly enough I bought one 3.99 last week I think and it wasn't charged tax. The only one in the midst of many. It was from a big 6. I guess that one slipped through.  

So I guess here in Texas, there is no difference between physical and digital as I now pay taxes on all.


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## Jan Strnad (May 27, 2010)

Here in California we lost our affiliateships over this issue. They are back now, though I haven't renewed (just haven't bothered) with a promise from Amazon to build a warehouse here and hire x-many Californians. I believe the collecting of sales tax has been postponed.

I don't have any problem at all with Amazon collecting sales tax. The states can use it.


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## Tris (Oct 30, 2008)

I live where Amazon HQ is located, so I always paid taxes on my Amazon purchases.  My state (WA) requires that all online purchases be charged sales tax which percentage can be different in some areas depending on your county.  Since the law has been in place for years, I just mentally calculate how much it is before I purchase...second nature.  So I don't see it has a huge blow.  I barely remember when we didn't pay sales tax for online items.

When I lived in DC/NoVA, I was SO surprised by two things.  1) How amazingly low the sales tax was, and 2) no sales tax on online purchases! I know...I know WA doesn't have an income tax as so many other States do, but funny enough my family (who was helping me move at the time) and I went crazy!  We were amazed that DC/NoVA could purchase items tax free for kids going back to school shopping.  Our current sales tax is 9.5% (which I fully expect to rise to 10% soon), compare that with 4.5%, it's nice.

When I hear the media making a big deal out of this, it just makes me chuckle a bit.

Tris


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## charlesatan (May 8, 2012)

Ann in Arlington said:


> I'd guess that has to do with fees imposed on Amazon by the Phllippines for the right to sell at all, or possibly additional costs for 3G service overall. In other words, they have greater overhead due specifically to their right to do business in that country so they add fees to cover some of those costs that are NOT present elsewhere.


The $2.00 is universal when it's applied (i.e. it's not $1.00 in country X, $3.00 in country Y, etc.) although Amazon has made some deals with some countries (there was previously Whispersync charge in Australia, now it's been gone due to deals, from the reports that I've heard).

If I were using their Whispersync, I'd agree with the assessment, but the problem is that it's a blanket charge regardless of whether you're using Whispersync or not.


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## LadaRay (Apr 6, 2011)

VAT in Europe is crazy ridiculous. I wouldn't be surprised if we were next.


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## hamerfan (Apr 24, 2011)

I live in Kansas. No tax of any kind charged from Amazon for ebooks. Tax charged for physical goods, though.
Lawmakers are smart. There will be taxes on everything sooner or later.


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## bce (Nov 17, 2009)

hamerfan said:


> Lawmakers are smart. There will be taxes on everything sooner or later.


No, lawmakers are greedy. And there will be ever increasing taxes on everything unless WE get smart.


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## Linjeakel (Mar 17, 2010)

LadaRay said:


> VAT in Europe is crazy ridiculous. I wouldn't be surprised if we were next.


It's true - it's hard to keep up with what's going on. Unlike physical books, ebooks sold in the EU are supposed to be subject to VAT at the full rate (currently a whopping 20% in the UK).

However, some countries are rebelling against this. France has lowered it's rate for ebooks to 7% with the French government picking up the tab for any fines issued to publishers for so doing.

At the beginning of this year Luxembourg dropped it's ebooks sales tax from 15% to 3%. Now this is interesting, since Amazon's European arm is based in Luxembourg and currently the law says the rate applied should be that prevailing in the country of the seller. So when Amazon sell ebooks in the UK, they only need to charge the 3% - which is great for us Kindlers but, not surprisingly, other UK based ebook sellers are not happy about it.

Unfortunately, the EU are getting around it by changing the law in a couple of years so that the rate used has to be that prevailing where the buyer is situated. Which means for us in the UK - and probably most of Europe - we'll be paying 20%.  The UK government refuses to be budged on this.

It's about time that ebooks and physical books were treated the same.


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## Tony Richards (Jul 6, 2011)

It's always been the case in the UK that ebooks are not counted as proper books and so are not exempt from tax ... odd, but that's British officialdom for you.


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## Chad Winters (Oct 28, 2008)

hamerfan said:


> I live in Kansas. No tax of any kind charged from Amazon for ebooks. Tax charged for physical goods, though.
> Lawmakers are smart. There will be taxes on everything sooner or later.


Agreed , I'm surprised it has taken them this long


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