Amazon, Google and taxes, oh my!

January 8, 2010

The credit card bills with Christmas charges are starting to show up and, like millions of other shoppers, the hubby and I spent much of our holiday budget at virtual storefronts.

Such dot-com spending habits are of great interest to state tax departments. I've blogged before about cities and states going after online operations, as in Chicago's tax lusting after eBay and StubHub transactions.

But the favorite tax target of most state revenue offices is Amazon.

The Seattle-based seller collects sales tax in just a few states. Last year, however, the quest for more money prompted several revenue-hungry state legislatures to try to force Amazon and other retailers
to collect sales tax on purchases made by their online customers.

The states' argument? Web retailers have a physical presence, known in legalese as a nexus, in the tax-seeking states because of the online companies' ties to
locally based affiliates. These are other Web sites that advertise and link to Amazon products and from which the affiliate site gets a percentage of any sales or Web page clicks.

Amazon was pretty successful in fighting back in 2009, in large part by cutting off affiliates. It looks like the books-and-more seller will have to do the same in 2010.

Lawmakers
in
a number of cash-strapped states are poised to revive efforts to
make Amazon.com and other internet retailers collect sales tax
, reports Seattle's TechFlash.

If the state tax collectors ultimately succeed, it could have far-reaching consequences not only for Amazon, but other companies that depend on e-commerce.

How often do you see sales taxes added to your online orders? Have you ever passed on an electronic purchase because of an added tax charge?

Mon Dieu! Google's a tax target, too: Another Internet giant also is in tax cross hairs. But the tax collector this time is French.

In fact, the predominant search engine isn't alone. CNETNews says the French government is recommending that Google, MSN,
Yahoo and other big advertising companies
, as well as Internet service
providers, be taxed.

The report contends that Google is "profiting without any consideration" for music artists and
book publishers.
Those sectors of the French economy would get the added revenue, an estimated $28 million, from any new tax.

Christmas tree ceremony at the Elysee Palace in Paris

French President
Nicolas
Sarkozy will have the last word on whether to push the report's proposals (there are 22 in all) through the legislative process.

By the way, one of the authors of the report is a former music
executive who produced the song stylings of France's First Lady Carla
Bruni-Sarkozy, pictured above with her country-running, tax-deciding hubby.
Conflict of interest much?

France's Internet tax is is still just a suggestion, but it's getting a lot of coverage. TaxProf has a roundup of articles on the Google tax.

I can't wait to see what kind of home page graphic Google comes up with for this proposal!

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