I'm guessing for California they'll lobby to extend it for another year, and another year, etc...
Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.
Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when other states passed nexus provisions).
Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot.
I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.
You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners.
It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.
Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes.
If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.
Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are.
Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency.
Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.
Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A.
A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does.
So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.
Not really, no. As far as I can tell, they all provide products or services in some for to end users outside Amazon.com's retail business.
Not that it matters. The principles are well-enshrined in the common law system, codified and uncodified. You may think it's ridiculous, but the courts take it seriously.
It's not even non-taxation. It's the fact that no two states with sales taxes have the same rates (which can also vary by locality), rules about what it applies to, or filing mechanism.
Amazon and everyone else involved in ecommerce would be a lot happier if there were a unified system/database for dealing with sales taxes in the US. Rates and rules wouldn't necessarily have to be the same, but there at least has to be one system with unified categorization of products and a unified filing mechanism which can be automatically queried, and as long as the merchants use that system in good faith, they would need to be immune to any sort of lawsuit or prosecution for not meeting the actual legal requirements of any particular state/locality.
Amazon ran Target's online store for years, and collected locality-appropriate sales tax on those orders. It's not as hard as some people make it out to be.
Target has a physical presence in many locations, so they already have the tax data for those locations. If they just calculate the taxes based on the rate at the nearest Target location (which is what would happen if you went to the physical store and bought something), then it would be easy. If they have to calculate the tax based on the address of the recipient, the problem becomes insanely difficult.
The varying rates aren't a problem, for certain; Amazon deals with those just fine in various localities (Canada has approximately 10 different rates; I don't think that cities are allowed to put additional sales taxes, as that's reserved to the federal government and the provinces/territories). What's problematic for Amazon (IMO) is the wildly varying applicability rules and filing mechanisms.
I think your idea of a unified sales tax database/system is spot on.
In my home town of only 50K (before the tornado, it's Joplin, MO) there are sections of the town with their own additional sales tax, the theory is to improve that particular business district or to pay for the city's contributions to it (e.g. intersection upgrades). On thing I'm noticing as I work with receipts for my insurance claim is that of the three Wal-Marts in two cities we did and now shop at (the one we used to exclusively go to was destroyed and is rebuilding) each has two different sales tax rates (don't forget that rates also depend on what is being bought, e.g. food of certain types is taxed less). And then there is the statewide state sales tax holiday for certain back to school supplied in late August....
This is serious nightmare ... but much less so for a company of Amazon.com's scale than a potentially dangerous to it upstart.
I forgot to add: my current temporary location is in an unincorporated part of the county, although part of the plot of land is in a 3rd city. What sales tax rate should be assigned to me for mail orders? For fairness (if you believe in doing this at all, which I don't), it ought to be the business district where I do the most shopping (the one that at the moment has precious few functioning businesses since most were totaled if not totally destroyed).
(Note that I don't agree with charging sales tax on mail order purchases; the mail order companies do not benefit from taxes except, say, though that maintain public order, and that's party captured by the delivery companies they use which do pay local taxes (except for, I assume, the USPS, but that's another issue).)
Amazon has 33k employees [1], estimated; they can figure it out. Also, I'm positive there's at least one company selling such information -- thousands of other retailers, most much smaller and much less technically sophisticated than Amazon, still manage to make it happen. This is an idiotic excuse.
Actually, I'm pretty sure you're wrong about companies selling this information. Smaller retailers manage to avoid this hassle by... not having to pay sales tax for out-of-state purchases.
That might be whats behind Amazon's change of heart. This will be difficult for them, but its probably impossible for smaller retailers. It might be expensive in the short term, but it protects them from competition in the long run.
I think GP was suggesting that there is at least one company selling software that will allow you to compute sales tax on an order, not that companies are selling their order book to states for the purpose of use tax enforcement.
Yes, Amazon does. But if it applies to Amazon then it will apply to all the other smaller internet retailers as well. The historical precedent was that it creates an undue burden on said retailers who have to collect such a tax. It's not an excuse, it's a Supreme Court ruling.
So your solution to the problem of there being hundreds of thousands of potential tax rates for every single item is to require everyone selling anything online to pay Thomson Reuters for a subscription to their database?
Or one of their competitors, yes. Or figure it out themselves. Thousands of retailers from JC Penny to Sears to B&N, etc etc, figure it out. Also, you'll note that all online business already do this for the state in which they're located (with the exception of states that don't charge sales tax, but those are relatively few), so businesses can clearly do it. 50 states instead of one is a minor matter of scale, and is no more complex than figuring this out for one state. Which they already must.
Also, if Reuters has excessive profits, someone will probably make a competitor. That said, it's basically a solved problem, except when companies want to hand wring their way out of paying taxes.
BTW, don't be ridiculous about "hundreds of thousands". Unless you mean thousands. Even TR in their sales literature only mentions 13k tax authorities [1]
Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.