Amazon Sales Tax Dispute Goes To Court As Mall Sues The State Of Indiana

INDIANAPOLIS -- Shopping mall giant Simon Property Group sued the Indiana Department of Revenue on Thursday to try to force it to collect taxes from Amazon.com Inc. for all sales made in the state.

The nation's biggest mall operator, whose Indianapolis headquarters are across the street from the Statehouse, said it was not seeking monetary damages in the lawsuit filed in Marion County courts.

"This action is being filed to benefit all of Indiana's taxpayers and the state's bricks-and-mortar retailers," Simon said in a statement.

Simon, which operates 27 Indiana shopping centers, said it requested the Revenue Department begin collecting sales taxes on sales made by Amazon.com within the state's borders as required by state law.

Amazon operates three distribution warehouses in Indiana and announced in July it plans to open a fourth in the state.

"Amazon.com is required by Indiana law to collect and remit sales and use taxes to the state, for sales made over the Internet, but has consistently refused to do so even though it is required by current Indiana laws ..." Simon said. "Main Street retailers are being harmed by this unequal playing field in Indiana and their existence is being jeopardized and threatens the employment of hundreds of thousands of retail employees in our state."

The state levies a 7 percent sales tax on most goods, giving online retailers a sizable advantage.

Revenue Department spokesman Bob Dittmer said the agency had not seen the lawsuit and had no immediate comment.

An influential lawmaker, state Sen. Luke Kenley, R-Noblesville, said last month he would approach other members of the General Assembly on the need to apply the state sales tax to online retailers. He estimated taxing online sales could net the state up to $400 million annually and would put online retailers on the same playing field as traditional merchants.

A 1992 Supreme Court ruling effectively bars states from collecting taxes from most online operations. Kenley is president of the national group lobbying Congress to change the law.

A message seeking comment was left Thursday on a media telephone line at Seattle-based Amazon.com. Amazon spokeswoman Mary Osako said last month the company believed "the sales tax issue needs to be solved at the federal level."

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Comments

[Pug Man]

02:50 PM on 12/10/2011

Why should I, or anyone else as consumers, have to pay our state sales tax on purchases NOT MADE in our states? Whether it is from Amazon or anyone else not with a physical presence in our respective states, it has always been the LAW that the merchant must have that physical presence.

It's not right and strong-arm tactics being enforced by greedy, corrupt states.

[houbc]

01:50 PM on 12/10/2011

I support Occupy and exposing corporate excess, but this to me sounds like a bunch of whining. Retailers succeed through growth, innovation and the overall consumer experience -- it's not always about the price tag. Seems to me if you want to open a corner bookstore using a centuries-old business model and a gaggle of sarcastic employees, don't be surprised if someone comes along with a better idea. And don't co-opt the name of a legitimate movement with crybaby BS. Whatever the outcome of Occupy, free market competition never die.

[jayes]

09:32 AM on 12/10/2011

on the one hand, it makes sense. on the other hand, having a book shipped to your house versus going to a store to pick one out is a different experience. i suppose it's the same product, but it seems more apples and oranges.

[tooncesrocks]

08:36 AM on 11/08/2011

Small businesses will go under if laws like this go through.

Solution: 1 Federal tax rate for online sales.

No state & no city tax on online sales.

[Steve Davis 1]

12:32 PM on 11/07/2011

We do need a uniform and consistent sales tax policy nation wide.
Maybe, a 10% tax easier to calculate than 9%. The nationwide sales tax instituted with all states eliminating their sales tax. Each state then getting 8% of the 10 and US Treasury applying 2% to debt reduction.
Some states currently without sales tax or lower tax might be able to lower income tax rates or property tax rates, other states would then have to raise these because of dependence on high sales tax currently. In the end commerce would be more efficient and revenues more evenly distributed to all states.

[drp103]

04:53 PM on 11/06/2011

You can buy a TV or headphones or DVDs or a million other products on Amazon or from a dozen other online retailers for far less, even after you calculate a sales tax of 6% into the final price. It's not going to stop most Amazon-type shoppers from shopping online.

Compare Best Buy's or Walmart's prices without state taxes to the online price of products like DVDs.

I smell a conspiracy!----states are finding ways for the middle class to fill the budget gap.

#OWS!!!

[CaroleK1970]

04:13 PM on 11/06/2011

I stopped going to malls before Amazon so its a no brainer

[monoloco]

10:52 AM on 11/06/2011

Their ability to avoid collecting states' sales taxes is the only thing maintaining their razor thin margins, Amazon is a grossly overvalued company, with margins continuing to shrink it is hard to see how they will ever be able to increase their volume enough to grow into their PE ratio.

[BushBites]

09:44 AM on 11/06/2011

Amazon's on the wrong side of history on this one.

[Jerry Barry]

11:07 PM on 11/05/2011

Amazon can move to Tax Friendly states and than Indiana will lose jobs and tax money from workers.
There are plenty of Southern States that would love to have Amazon move to their states just like major car manufactures like Hyundai did in Alabama.
Come on down Amazon to the Friendly Southern States and leave the pathetic old industrial states behind.

[BushBites]

09:45 AM on 11/06/2011

There's more to shipping products worldwide that finding a state with bad roads, an uneducated workforce and no international air routes.

[roald]

09:41 AM on 11/07/2011

Sales taxes are usually collected based on the state to which the order is being shipped.

[nemesis7c]

12:10 PM on 11/05/2011

The Simon Property Group, is a very wealthy company! I'ts owners are in the 1% 0f the 1%. They want to raise taxes on the poor man, but don't raise theirs! They have let all their malls here in Indy get run down. And they drove out all the good retailers because for the amount they have to pay them,"The Simon's", its better for them to just find someplace else. They should be ashamed. The money that they are giving lobbyist and lawyers, they could update the bathrooms, and roofs of their buildings!

[Tom95134]

02:32 PM on 11/05/2011

Then stop shopping there.

[frank day]

05:19 PM on 11/05/2011

I'm no fan of the Simons, but Amazon needs to play on a level field.

[WthyrBendragon]

10:07 AM on 11/05/2011

Drive your car from home to grocery. $3 in aggregate gas, oil, wear, insurance, time, tires, etc.
Drive your car from grocery to mall. $3 more.
Drive your car from mall to restaurant for lunch. $3 more
Drive your car from restaurant to gas station. $3 more
Drive your car from gas station to home. $3 more.

You just paid $15 in shipping and handling.

That's part of why I shop online whenever possible.

[frank day]

05:20 PM on 11/05/2011

So paying your sales tax should be no big deal.

[WthyrBendragon]

11:46 AM on 11/07/2011

I expect to pay the sales tax, and I expect the online vendor to leverage my ship-to postal code in calculating that tax so they can collect it correctly.

Online vendors need to establish a consolidated, shared service to support this activity. That takes the collective burden of development and operation and centralizes it. Additionally, the data model and lookup queries should be simple enough that a vendor should be able to issue an XML SOAP request containing postal code and pre-tax price and receive an XML reponse in about a second.

[hawhite2000]

03:36 AM on 11/05/2011

How do they even have standing to file this case?

[WthyrBendragon]

10:01 AM on 11/05/2011

Simple... as a company with business operations physically present in Indiana it is reasonable for the state to demand sales tax on shipments to residents of Indiana. The mall operator - who also has business operations in Indiana is materially injured by the failure of the state to collect the tax from Amazon.

[Tom95134]

02:38 PM on 11/05/2011

Not sure about Indiana but generally it is the obligation of the purchaser to pay the sales tax. If Amazon supplied a list of all purchases that were shipped to Indiana and the purchaser's information then the State could bill the purchaser. If they don't pay then simply put a block on DMV activity for that person. Or, it could simply be added to their vehicle's license renewal.

There are ways to deal with this besides forcing Amazon to become the tax collector for all the states. Collecting taxes for all the States is a very complex process because of the different rates and taxing authorities. I don't blame Amazon for refusing to do this unless they have a physical presence in the State.

[Pug Man]

02:54 PM on 12/10/2011

Then Amazon will leave Indiana and because of Simon, Thousands of jobs will be lost.

Idiots at Simono..

[hawhite2000]

03:34 AM on 11/05/2011

I'm sure Amazon will pay taxes at some point but they need to work on how the tax is calculated. If I buy something in State A based on home location (billing address) and ship it to State B, I pay State B's sales tax. I should pay State A's sales tax.

[Tom95134]

02:40 PM on 11/05/2011

Actually, all sales/use taxes are based on where the product "ships". We tend to think of this tax as a sales tax but it is really a "use" tax.

[DRaymond]

02:51 PM on 11/05/2011

The primary effort for standardizing sales tax as the basis for enabling legislation is the SSUTA and the associated Main Street Fairness Act. Sales tax would be collected based on the 'ship to' address or the billing address of the credit card if there is no physical delivery (as in music downloads for example)

[MrsGreebers]

01:06 AM on 11/06/2011

Main Street Fairness. Brought to you by Wal-Mart and Best Buy.

[hawhite2000]

03:32 AM on 11/05/2011

The reason I'm not in the mall is not because of sales tax it is because the mall's customer service sucks. How many times am I asked if I need help when I don't but when I do there is no one to be found?

[redraspberry]

08:23 AM on 11/05/2011

Not to mention the inflated prices due to the exorbitant rent the mall shop owners need to pay. I bet most Simon malls are at least 1/3 empty.

[roald]

09:46 AM on 11/07/2011

Then continue to shop on-line and start paying sales tax.