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-Short Attention Span Theater-

Savings.com "Dear John" Letter to the State of California

2011-09-12

Dear California,

We're terribly sorry to have to do this but we're no longer a good match for each other. And trust us when we say it's you, not us...we just can't afford you anymore.

Ever since you and your new BFF--the Affiliate Nexus Tax--started hanging out, people just don't want to do as much business with us anymore. Sure, we know it seems only fair that online retailers without a physical presence in California should have to collect sales taxes from their customers just like everyone else. The problem is, until every other state--or the federal government--feels the same way, companies like Amazon.com, Overstock and others have decided that it's not worth working with us (or 25,000 other California-based businesses) anymore. Apparently, in your eyes, our affiliate relationship makes them liable for collecting taxes. They've decided it makes better sense to just work with affiliates beyond your, admittedly still picturesque, borders.

We know this letter might come as a bit of a shock--especially because things had been going so well between us. Last year alone we helped drive $400 million in sales and we've doubled the number of California jobs we provide year-after-year. And people started to notice: the LA Business Journal named us a "Best Place to Work in Los Angeles" and then Inc. Magazine just named us one of the "500 Fastest Growing Companies in 2011." So what went wrong?

Well, you're a Pisces, we're a Gemini. And maybe we're just being sensitive--like the time we asked you what color our eyes were and you said "white"--but we can either stick with you and try to weather the loss in revenue during these already fragile times, or we can start considering some of the offers from the other states that changed their feelings about affiliate companies like us. Sure, we'd miss you (you are still gorgeous after all) but maybe some clean Rocky Mountain air, or the sound of crashing surf on The North Shore, would be refreshing. Don't worry, you could keep the futon, VCR player and Charoodles--but our 100+ employees and the state income taxes they pay each year would be coming along with us.

Now, please, don't be bitter. We'd still want to be friends of a friend, even if we were, like, totally on opposite coasts. We had some good times, or so we think (FYI, we don't even care about the Napa Zinfandel you spilled on our throw pillow anymore). Hopefully you feel the same way. So, if you're still interested in us, here's a good place to go for information on how we might able to work things out: getbackinbusiness.org.

In the meantime, take care of yourself--and don't forget to water the ficus.

All the best,
Savings.com

P.S. Our friend the LA Times told us that Amazon says they're not even going to pay the sales taxes you say they owe :(
Thus the exodus of jobs accelerates out of California.

Posted by:DarthVader

#5 The problem is not taxes collected in the state where the transactions occurred. IAW with Quill Corp. vs North Dakota no one has argued that if they had a physical presence in the state whether they will collect and pay taxes. It is were the commercial transaction physically occurs outside of the state seeking taxes.

1 - a webmaster in CA running a blog that is on a server in UT has a referral button to company A in FL. Surfer in ME see said blog on the web and clicks on the referral. That results in a sale that is processed on a server in MO. Company A pays the referrer a small fee for the referral. No one disputes that the webmaster is on the line for 'income tax' in the transaction. What is disputed is that anyone owes CA any sales tax for the transactions that were completed between seller and buyer beyond its sovereign jurisdiction per Quill.

2 - similarly same scenario as above but Company A has a warehouse in TX. Company A directs the warehouse to ship that part of its inventory that was ordered by the customer in ME the item(s). TX now claims sales tax as well. Now company A wouldn't contest the collection and payment of taxes, if the recipient lived in TX, but since the party is out of state and the transaction was between ME and FL, believes the sales tax is not valid. Company A closes said warehouse and moves to another state that wants employment and the usual taxes incumbent with employees.

It's not going to be resolved in Congress because everyone wants a piece of the action and the instance of transaction can only occur in one state. The Senate will inhibit the big states from ganging up on the small states in the fight. What could happen is that the Fed levy a 5% sales tax that it'll keep for itself giving the internet companies immunity from the states. That'll make a lot of happy people. /sarc off

Posted by: Procopius2k 2011-09-12 15:24

#4 The Internet was given tax collecting leniency in the past in order to let on-line business get its collective feet on the ground.

Any different than the proforma licenses issued to television stations? Seems that they've survived the 'infant technology' phase and aren't going out of business left and right. How about a royalty fee like mining or forestry companies pay for use of federal lands, in this case the public use of the electromagnetic spectrum. It can even be 'progressive' based upon the power of their transmitter. Let play first in, first out. Let's see the proposed tax on those boys first.

Posted by: Procopius2k 2011-09-12 14:55

#3 As I understand it, the bill in question has already been put on hold (by mutual agreement with business) in order to give Amazon et al time to lobby Washington for comprehensive interstate legislation. Thus, this letter from savings.com seems so ill-conceived and ill-timed that it jumped the shark even as it was being pounded out on the executive steno's Underwood.

Times have changed. The Internet was given tax collecting leniency in the past in order to let on-line business get its collective feet on the ground. On-line business is now standing tall financially and no longer needs an assist from the US taxpayer.

Posted by: Pollyandrew 2011-09-12 14:37

#2 That just made my day!

Posted by: eltoroverde 2011-09-12 14:26

#1 Priceless! :-D

Posted by: Barbara 2011-09-12 12:42

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