# Amazon charging tax on the $79 Prime Membership?



## sosha (Feb 9, 2010)

Seems Amazon is tacking on sales tax for the Prime membership in CA.  CostCo doesn't charge me sales tax on my membership (which I just renewed yesterday), so how can Amazon?

I posed this question to customer service.  Every person I contact has a different response.  I'm now told that CA, PA and TX pay taxes on all items sold by Amazon.com, effective September 15th.  I know the tax laws changed in January, but September 15th?  Come on!  

Anyone in CA, PA or TX notice any changes since Sept 15?  I've gone back on my orders, and can't determine any rhyme or reason to their taxation policies.

Patty


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## Atunah (Nov 20, 2008)

I got charged tax on my last prime charge in October. I am in TX. I was a little surprised about it too. I know I have to pay tax now on products sold on Amazon, but I didn't realize I'd have to pay it on a service like prime too. 

I think TX started with the tax thing in September. I can't remember exactly now when.


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## Betsy the Quilter (Oct 27, 2008)

This discussion on the Amazon forums makes some interesting points:
http://www.amazon.com/forum/amazon%20discussions%20feedback?_encoding=UTF8&cdForum=FxLCMW9UN2N6QR&cdThread=Tx1RMM65D2XONA

The main argument seems to be that it is not a "membership fee" no matter what Amazon says, but a prepay for services like shipping. I guess an argument could be made that it is also prepaying for video rentals.

Betsy


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## lindnet (Jan 25, 2009)

Wow, I would never have thought I would be charged tax on Prime.  I don't see how the "prepaying for shipping" argument would hold water.  We don't pay tax on shipping, do we??  And tax on streaming video??


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## Betsy the Quilter (Oct 27, 2008)

The tax on video rental was speculation on my part; if they don't charge tax on that in CA, it's not pertient.

Betsy


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## sosha (Feb 9, 2010)

Interesting.  I've never known a law to go into effect on such an arbitrary day.  

They told me I'm not charged tax on the preordered 8.9 cuz I ordered before 9/15.


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## lindnet (Jan 25, 2009)

sosha said:


> Interesting. I've never known a law to go into effect on such an arbitrary day.
> 
> They told me I'm not charged tax on the preordered 8.9 cuz I ordered before 9/15.


Umm.....I think you might end up with a surprise. I ordered both the PW and the 8.9 the day they went on sale. When the PW shipped, I was charged tax on it. You're charged sales tax according to the date they ship it and charge your card, not the date you ordered it. I was hoping it went by the order date as well, but it didn't.


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## lindnet (Jan 25, 2009)

DreamWeaver said:


> There was a battle between California and Amazon last year, which ended with Amazon agreeing to start collecting sales tax on California purchases a year later (beginning September 15th of this year). Other Internet merchants are affected by the new law too.
> 
> Yes, California sales tax can apply to charges for delivery, shipping, and handling.  Amazon isn't charging tax on streaming video. I'm not an Amazon Prime member, but I do occasionally rent movies from Amazon...no tax.


Yes, I knew customers from CA were paying sales tax on Amazon purchases as of Sept. 15, but I don't think we usually pay tax on shipping. http://www.boe.ca.gov/pdf/pub100.pdf


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## sosha (Feb 9, 2010)

lindnet said:


> Umm.....I think you might end up with a surprise. I ordered both the PW and the 8.9 the day they went on sale. When the PW shipped, I was charged tax on it. You're charged sales tax according to the date they ship it and charge your card, not the date you ordered it. I was hoping it went by the order date as well, but it didn't.


When I look at the order, no tax is included. That would suck. (pardon my language)


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## Betsy the Quilter (Oct 27, 2008)

lindnet said:


> Yes, I knew customers from CA were paying sales tax on Amazon purchases as of Sept. 15, but I don't think we usually pay tax on shipping. http://www.boe.ca.gov/pdf/pub100.pdf


Yeah, that pub was cited in the Amazon discussion, too. But on the side of tax on shipping being OK...


Betsy


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## Mandykins (Sep 24, 2012)

Yes, all my purchases now charge sales tax (I live in CA) and have since September. I was beyond pissed today when I looked at my bank statement and noticed that I was charged tax for the Prime renewal, I was not expecting that at all and don't think it should have been charged because it's a service not an item.


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## Betsy the Quilter (Oct 27, 2008)

Another pertinent discussion on Amazon.

http://www.amazon.com/forum/amazon%20discussions%20feedback?_encoding=UTF8&cdForum=FxLCMW9UN2N6QR&cdThread=Tx1REC0TXL2ZG44

Betsy


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## mooshie78 (Jul 15, 2010)

lindnet said:


> And tax on streaming video??


Netflix charges sales tax (since they have shipping facilities in most every state, if not every state). I only have the disc rental plan with them though, but I think the streaming part got taxed to when I had it as well before getting Prime.


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## Skydog (Mar 16, 2009)

sosha said:


> When I look at the order, no tax is included. That would suck. (pardon my language)


Unfortunately, tax *will* be charged when it ships.

Sent from my Nexus 7


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## kltmom (Jan 9, 2012)

mooshie78 said:


> Netflix charges sales tax (since they have shipping facilities in most every state, if not every state). I only have the disc rental plan with them though, but I think the streaming part got taxed to when I had it as well before getting Prime.


I have Netflix, but my plan is the opposite of yours--streaming video only. I am not charged any sales tax.


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## Fielder (Nov 12, 2012)

FWIW, I live in California, and have found since February some Amazon purchases are taxed and some are not. If there are several items in the cart, often some of those items are taxed and some are not. In the same cart!

Perhaps it depends on which warehouse the particular item ships from?

By the way most items I bought from Amazon were NOT taxed (since Sept 15). But many were.


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## musclehead (Dec 29, 2010)

I live in Colorado. I just paid my $79 Prime membership and they did not charge sales tax. I have the Netfilx DVD-only plan, and I pay sales tax on that.


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## Hadou (Jun 1, 2011)

mooshie78 said:


> Netflix charges sales tax (since they have shipping facilities in most every state, if not every state). I only have the disc rental plan with them though, but I think the streaming part got taxed to when I had it as well before getting Prime.


Fortunately, the streaming-only package isn't taxed. At least for us it isn't.


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## C.L.Stone (Nov 15, 2012)

There was talk here in Louisiana recently about the local government wanting people to report anything they bought on the internet in your state taxes to collect for sales tax. It seems since we buy so much from the internet now, sales taxes are down. (You generally don't pay sales tax unless you live in the state the company is in, right?)

Is California now saying they want to collect sales tax on everything that Amazon sells to people in other states? If legally I should be reporting my purchase to Louisiana and they would ask for a sales tax, wouldn't I be paying double tax on an item?

It's interesting!


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## Mike D. aka jmiked (Oct 28, 2008)

C.L.Stone said:


> (You generally don't pay sales tax unless you live in the state the company is in, right?)


It may vary from state to state, but here in Texas we have a "Sales and Use tax", and you as an end-user are required to pay the tax on internet (and all mail-order) purchases whether the selling company has a presence in your state or not. Except for the items on the tax-exempt list, of course.

Also, Texas law states specifically that shipping and handling charges to end-users are subject to the tax.

There are some situations where this is not true, but it's unlikely the average purchaser will encounter those.

I think the only time you may not have to pay the tax is when you physically are in another state and purchase an item and then return with the item. But I wouldn't put it past them to require the tax even then. 

Mike


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## Ann in Arlington (Oct 27, 2008)

The current law says that you pay sales tax to your home state on items purchased out of state. I believe it originated decades ago when catalog shopping was popular.

If a company has a 'nexus' in the state you live, they are obligated to collect the sales tax on behalf of the state and remit it accordingly. Hence, Lands' End began collecting sales tax on catalog/on line orders once their stuff began being sold in Sears stores which are all over. Before that, they only collected for Wisconsin residents. If you live in Maine or Virgina or one of the other handful of states where L L Bean has stores, they calculate the sales tax when you order on line or by catalog from them. Otherwise, they don't.

_In these cases you're probably supposed to voluntarily report and pay to your home state_ because many states also have a 'use tax' law which says that its residents are obligated to submit the sales tax themselves, usually with their annual tax return, for anything they bought out of state that they did not already pay tax on -- generally catalog/internet sales. Arguably, if you go to a neighboring state to buy something, you'd pay _their_ sales tax and not be obliged to also pay to your own state. Though some argue that, no, you ARE supposed to pay it to your own state too.

ANYWAY. . . . .California, in an effort to get the tax paid -- not surprisingly it wasn't usually: human nature being what it is and the state having no way to know what any individual might have purchased out of state -- declared that, because Amazon had 'affiliates' that were California residents, they therefor had a 'nexus' and so were required to collect the tax on behalf of the state. Again, the main reason for this reading is that the state had no way to force residents to send it in voluntarily. Initially, Amazon said, "o.k. then, all CA affiliates are hereby terminated, now we have no more nexus."

This was not good for Amazon -- they potentially lost sales they might have gotten through their affiliates; not good for the affiliates -- they potentially lost income; and not good for California -- not only did they still not get sales tax on stuff CA residents bought from Amazon, they also lost the opportunity to collect income tax on the income the CA affiliates made from being affiliates.

After some time, CA and Amazon came to a meeting of the minds and the upshot is that Amazon does, now, collect the sales tax for the state for purchases by CA residents. I believe the key thing was that Amazon wanted a distribution center in CA to make delivery faster and that was going to be a bona fide nexus anyway, so it was coming sooner or later. No doubt they got something from the state in return for their agreement to start collecting the tax even before the warehouse was built.

Similar things have happened in other states.

You may or may NOT, because of the above, have to pay sales tax on ebooks. That is independent of the nexus issue and is, rather, contingent upon whether your state taxes digital content. Some do, some don't. Same is true for whether or not shipping charges or services are taxed.

Note that none of the above means that California can tax people who live in other states. They've just gotten Amazon to agree to collect tax, where appropriate, on merchandise delivered to a California address.

FWIW, Amazon has advocated scrapping the current state by state system for internet/catalog sales -- it's a huge record keeping burden -- and going with a single 'internet tax' that would be collected uniformly and distributed among the states according to sales figures generally -- rather than resident by resident.


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## Moosh (Dec 22, 2009)

Sounds complicated! In Australia we have GST (Goods and Services Tax) and it's 10% in all states. But then we're quite progressive, metric system and all that.


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## Ann in Arlington (Oct 27, 2008)

Moosh said:


> Sounds complicated! In Australia we have GST (Goods and Services Tax) and it's 10% in all states. But then we're quite progressive, metric system and all that.


There is, periodically, talk of a "national sales tax", but it never gets off the ground very far. As it is, the states have the right to tax the goods sold there -- it all goes back to Jefferson and Hamilton and states rights vs. Federal rights.

But yeah, the current system means it's pretty complicated for internet/catalog sales companies, because, while the sales tax is generally around 5%, some states are lower, some are higher, and there's almost always differences in what exactly gets taxed: Food? almost never. Clothing? not some places. Digital items like books, music, or software may or may not be taxed as physical items. Or they're taxed at different rates.

Add to that: in some states local jurisdictions (counties) have the authority to add a half a percent or more as well. They can't tax something the state doesn't, but they can add on to the state's rate. Theoretically, an out of state catalog seller would have to know all those rates for every one of the 50 states. Plus the District of Columbia.

Which is why Amazon would like to see, if not a national sales tax, at least a national single rate tax for items sold via the Internet.


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## mom133d (aka Liz) (Nov 25, 2008)

I'd like it as well. Where I once worked, before the county raised its "prepared food" tax, it was cheaper to walk across the street to the cafeteria in the county than the one on the city side of the line. A few weeks ago, a friend came over to our place and questioned the tax he was charged on the food he had picked up down the street from our house. He lives two counties over. Its just confusing, and that should be something simple.


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## TLM (Apr 8, 2010)

Amazon will start collecting sales taxes from Indiana residences starting in '13 or '14.  Don't remember exactly.  As I pay a sales tax on stuff I buy in a store here, paying one to Amazon won't make any difference to me.  If the price was that close, I usually just purchased it locally.  I buy from Amazon because they have a broader choice, I can't even find it locally or the price was much better than I could find here.  Taxes won't make a difference in any of those situations.


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## Seamonkey (Dec 2, 2008)

Sales tax differs among California counties.  Unfortunately they keep adding more and more (not me, but crazy voters who seem to vote for any tax, thinking it won't affect them).

As of January 1, the taxes, which can also vary by city (and possibly by zip code!), seem to range from 7.5% - 10.0%.

I WAS hoping that the timing of the announcement of the new kindles might allow us to avoid the new tax for this purchase.    Guess not.


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## Moosh (Dec 22, 2009)

Moosh said:


> Sounds complicated! In Australia we have GST (Goods and Services Tax) and it's 10% in all states. But then we're quite progressive, metric system and all that.


I should add also that the GST is already included in the advertised price so it's not a 'surprise' when you buy something. For example, if I go and buy a hat and the tag says $10 then that's exactly how much it is. The breakdown prints on the receipt. I always struggle with tax when holidaying in the US cos I never know how much stuff is actually going to cost me at the checkout lol.


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## Ann in Arlington (Oct 27, 2008)

Moosh said:


> I should add also that the GST is already included in the advertised price so it's not a 'surprise' when you buy something. For example, if I go and buy a hat and the tag says $10 then that's exactly how much it is. The breakdown prints on the receipt. I always struggle with tax when holidaying in the US cos I never know how much stuff is actually going to cost me at the checkout lol.


Yeah. . .that's the main difference between here and most of the rest of the world. . . . . I agree it's a pain -- especially as different jurisdictions have different rates. If you live some place where you may shop in various counties or states there's no point in even trying to figure it out . . . . you just have to know that you'll need more than what it says. It's not as big an issue as most people use plastic nowadays.

But I do remember as a kid my mother sending us up to the shopping center at the top of the street. She would have something very specific in mind to buy and always calculated the sales tax, which was 4% at the time, before giving us the money. And she expected to see a receipt and the proper change when we got back! 

It's also very useful in teaching 3rd graders how to do 'percent more' math problems.


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## MarthaT (Mar 3, 2009)

Really wish they didn't have to, but I do pay sales tax on all my local purchases. I did tend to buy bigger ticket items on amazon to avoid the tax though


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