California tax collectors are gearing up to find a new way to collect sales taxes from Amazon.com, Inc. (NASDAQ:AMZN) customers.
Last year, Amazon made a deal with government officials in Sacramento that for most of the items shipped from the retailer’s warehouse, sales tax will be collected at the checkout starting September 15th. This doesn’t include items shipped their own warehouses from other sellers.
CNET summed it up beautifully, “That means a New York camera shop could have inventory located in an Amazon.com, Inc. (NASDAQ:AMZN) warehouse outside of San Francisco, and provide next-day — or even same-day — tax-free delivery to northern California customers.”
The representative of the State Board of Equalization (they collect the taxes) explained that it’s easy to assume they will have ways to find out who is holding a stock of goods in the state of California. Not only that, but they also have the enforcement authority in order to obtain the information via a variety of ways, and they will approach them for their tax obligations.
California isn’t the only state that targeted Amazon.com, Inc. (NASDAQ:AMZN) sellers for taxes. In Pennsylvania, if a seller has products sold at a warehouse in that state, those out-of-state shippers will have to pay Pennsylvania sales tax. This law took effect two weeks ago.
Amazon’s representative, Scott Stanzel, made a statement to CNET, but has yet to answer questions regarding their policies for third party sellers. He did say that the collection of sales tax is all on the tax obligations of the seller.
The economy is hurting, and the state of California is no exception. It makes sense why they would take such measures to collect taxes from out-of-state sellers who ship through their warehouses. The only concern we have now, is how this will affect Amazon.com, Inc. (NASDAQ:AMZN)- this may entice people to pull their “shops” from Amazon and sell elsewhere.
In other Amazon news, Goldman Sachs analysts met with the company yesterday and note:
On 9/13 we hosted an investor meeting in Seattle with Sean Boyle, Vice President, Investor Relations, and Dave Fildes, Senior
Manager, Investor Relations. The theme that permeated most topics was how the company evaluates the financial performance of its initiatives. The company evaluates new programs on absolute free cash flow, ROIC, and operating profit dollars, with routine reviews to ensure targeted milestones are being met. Amazon cited key examples of this financial discipline as Amazon Web Services (AWS), although it has not disclosed the division’s profitability, and Fulfillment by Amazon (FBA), where the company went against its grain and recently raised prices to improve economics. In our view, this commentary highlights management’s commitment to increasing profitability and gives us increased confidence in our forecast that CSOI margins bottom in 2H12.