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June 28 2009

FireflyFans.net loses main source of income to support site. Stupid Alliance-like law.

Come a day there won't be room for naughty men like us to slip about at all....
Damn, I thought this meant he lost his job and might close up shop. He should be able to wiggle around that with a bit of effort.

[ edited by Succatash on 2009-06-28 04:49 ]
Succatash,

With the economy and all, I thought the same thing when I read the title too.

[ edited by Anonymous1 on 2009-06-28 06:42 ]
Can't they just get someone not in that state to create a new Amazon merchant account and collect the money for them? Are the host servers even in Hawaii?
zz9,

Haken lives and works in Hawaii. I remember there being an earthquake there and us all worried and such.

[ edited by Anonymous1 on 2009-06-28 07:57 ]
What a load of gos se.
Talk about a hissy fit by Amazon. Shame Haken is taking the hit over it, he's one of the good guys.
Talk about a hissy fit by Amazon.

But isn't it Hawaii having the fit, not Amazon?

The bill will require any online merchant (Amazon.com, Buy.com, etc) that has affiliates in Hawaii to pay Hawaii sales tax. Meaning if Amazon.com has affiliates in Hawaii they must then charge Hawaii residents 4.5% sales tax on all their purchases.

Currently Amazon.com and almost all other merchants do not charge sales tax on items sold to Hawaii residents. If this bill were to pass they would have to charge sales tax if they have affiliates. To avoid this tax many merchants such as Amazon.com will just dump all their Hawaii affiliates and advertising contracts with Hawaii residents. By doing this they won't have Hawaii affiliates and will not have to charge Hawaii state tax.

I see a democratically elected government making a taxation decision, if the electorate don't like it then they can vote them out next time round. I see the Amazon move as a deliberate attempt to turn the affliates into lobbyists for Amazon.

The whole internet taxation thing is an unholy mess. It'll be interesting to see if other fan sites get hit.
Based on the info at FFF.net, I don't understand the logic beind this bill at all. I mean, if Hawaii wants to tax their residents who shop online, fine, I guess. But why does a banner ad become the deciding factor for this tax?

Just because Haken advertises on the web to non-Hawaiians, all Hawaiian residents must be taxed for shopping online? I'd say lobbying against this strange-sounding law seems like the normal, logical thing to do.
Hawaii isn't the only state doing this; North Carolina is passing a similar law, and Amazon is cutting off its associate program in NC as well.
Just to clear it up a bit, Amazon could have sales of a billion dollars in Hawaii, and tax (under the law at present) would not be charged. But if Amazon sign up one local merchant, who may sell three books a year, then Amazon would have to charge that Hawaii sales tax on the entire billion dollars, not just that one merchant's sales.

Since the majority of Amazons sales are their own trading I totally understand why they cannot risk those sales and lose a huge chink of money for the sake of having a few merchants.
I'm an Amazon merchant myself, but I'm with Amazon here.
I agree with zz9, besides fireflyfans isn't even a shop: they don't carry and sell books, they are just a link where people like me (reading the website in California) are reminded to link to Amazon to buy a book/DVD. There is no real reason why Hawaii deserves that tax more than California does. I can understand that individual states need revenue, but I'm not sure the internet is the place to look for it.
It's all well and good to protest the tax, and lead a charge to overturn it. But the immediate problem is that the tax evidently exists or is about to exist, so Haken's site is in trouble. He has a paypal link on the site for contributions. I, for one, will be using it.
How much could it cost to run that site, though? I mean what are they spending on more other than yearly hosting, if that?
Wow, that is a manipulative letter Amazon sent out. Interesting how they label the tax as unconstitutional without any reasoning to back that up.

I'm sorry individual people are getting burned by this, but the states trying to figure out how to get income from the internet is not going away anytime soon, and I don't like Amazon's choice of how to deal with this as the first 2 states put the laws on the books.
Sales tax is a pass thru tax to the retailer. They don't pay anything. They charge the customer and then give the money to the government. The only cost to Amazon is the (not insubstantial) administrative costs. However, it does hurt them competitively since their customers were enjoying a de facto 4.5% savings on their products.
I must be getting old, but when did the day of forming mobs with flaming pitchforks go out of style?

Sorry, putting the funny aside. I can understand Amazon's view on this. After all, they really don't have a choice in the matter under this new law. And, judging from the tone of this letter, they aren't very happy with the results as well. This one totally slipped by me somehow, now reading about the bill passing through North Carolina.

Darn, this is a troublesome thought. Uncle Sam has found another avenue to squeeze nickles and dimes from your pocket. It's now only a matter of time before it appears in your state's legislation. Friends, time to start tugging on those state representative and senate ears. Let your thoughts be heard.

(Sigh) I still think the flaming pitchfork was more effective...
Isn't it true that Hawaiian residents are required to pay the sales tax (or a "use tax" instead of it) for their purchases from Amazon anyway? I know California residents have to (though none I know actually voluntarily report their Amazon purchases to pay tax on them ;-)). This seems like a method of Hawaii to pass the buck of enforcing the payment of taxes which are now mostly evaded to the internet merchants. Not sure why this can only be done to merchants with affiliates in Hawaii, but not unreasonable. I must admit it is quite lousy that Amazon would have to know all sales tax regimes in the country, but still, that can't be that hard (considering stores like Walmart have to too).

In the end it seems like people like Haken are now used by Amazon as a pawn in a game in which Amazon tries to retain its unfair competitive advantage, where sales tax on items bought from them can easily be evaded, unlike sales tax on items bought in physical stores. And that is just plain lousy.
Kentucky residents are also supposed to keep track of all their on-line purchases and then pony up a 6% "use tax" to the state. Considering the ungodly financial disaster they've created here with the money that they suck out of taxpayers' pockets and stick into their own through other means, and the fact that Kentucky residents have among the overall highest tax burdens in the US and we're still broke, they can stick that "use tax" law, too. Only, y'know, someplace other than their pockets...
The Utah income tax forms have a spot where you're supposed to fill in online sales tax, too. I would imagine it's similar in most states. I would also imagine that most people don't bother.

I don't think it's entirely unreasonable for the government to want sales tax to apply to online purchases, if you're going to have sales tax at all, but this is not the way to do it.
Not sure why this can only be done to merchants with affiliates in Hawaii

It's not just done to Hawaii merchants, it would be applied to all sales by Amazon to people living in Hawaii.
The only way Amazon can avoid this is by staying out of Hawaii's jurisdiction. Having a single affiliated merchant who lives in Hawaii, even if they are a fan running a website from their bedroom selling three books a year, would be enough for Hawaii to claim that Amazon has "Operations" in Hawaii and is therefore under their jurisdiction and liable to administer this tax for them.
The administrative costs would be far higher than the taxes even if Amazon had to pay them and was forbidden to pass them through. Imagine the squabbles between states for someone who lives in one state, has their internet provider in a second, their business in a third ....

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