The Amazon Sales Tax Dispute

Amazon Logo Tax Dispute
Amazon Tax Dispute

With its seemingly endless number of products, competitive prices and customer focused shipping practices, Amazon.com (Amazon) is truly a commercial force to be reckoned with. Headquartered in Seattle, Washington, Amazon.com is the largest internet-based retailer in the world and, as of 2015, has surpassed Walmart as the most valuable retailer in the United States. Amazon began as an online bookstore but has since broadened its range of products and now offers a wide assortment of goods and services.

For a number of years Amazon has been at the center of a controversy regarding the collection of sales tax from customers. Amazon sells and ships products to customers in every state throughout country but does not collect sales tax in every state. Since it is an ecommerce company, Amazon does not always have a substantial physical presence in the states in which it conducts business and so many state governments lack the capacity to compel Amazon to collect sales tax. Many state governments are attempting to pass legislation which would compel Amazon to collect the tax, but this may cause Amazon to simply cease conducting business in whichever state passes such legislation.

In May of 2011 legislation was introduced in Congress which, if passed, would settle the issue entirely. So far, Amazon has not taken a public stance on the bill.

State Argument

State governments argue that Amazon possesses an anti-competitive advantage in the marketplace over traditional storefront businesses. And since storefront businesses are of course forced to collect sales tax Amazon should likewise be compelled to do the same. In other words, the sheer impact which Amazon has on state economies is reason enough to collect the tax even though Amazon doesn’t always maintain a strong physical presence in the states in which it conducts business.

State governments also have clear financial motivations to impose the tax as well, as sales taxes from Amazon transactions can add up to hundreds of millions of dollars per year in certain states.

Amazon Argument

In order for a business to be required to collect sales tax it must have a physical nexus in the state in question. Amazon contends that this physical nexus is either insufficient or nonexistent in many cases.

In order to sidestep the physical requirements, Amazon has created subsidiaries which are treated separately for tax purposes. Amazon also carefully monitors its relationships with affiliate businesses in order to make sure that its physical presence is kept to a minimum.

Final Thoughts

Both sides of the argument have a degree of merit. Amazon does make it difficult for many local retailers given its status as an internet-based company. But even if a given state passes legislation to compel Amazon to collect sales tax, Amazon may simply remove its activities from that state; this very thing has actually happened before on a number of occasions. Obviously, state governments would love the dramatic rise in revenue which would occur with the collection of sales taxes from Amazon transactions; and Amazon would love to avoid collecting sales taxes since doing so gives it a competitive advantage. Perhaps the matter will only be fully resolved at the federal level.

Image credit: Claudio Toledo

To learn more about how different business entities can help you save money view the following transcript on entity selection

The Biggest Tax Fears of U.S. Citizens

Americans have many fears when it comes to filing taxes. One of the most common is missing the tax filing deadline. Everyone is well aware of this date, but many people procrastinate and run out of time. Below is a list of the most common fears related to taxes experienced by Americans.TaxesScrabbleCloseUp

Having to Pay

When you find that you have to pay and are not getting a refund, take a second look at your return. Don’t fear having to pay, look for ways to cut your tax liability. If you have zero options, work out a payment plan with the IRS. While this option does come with having to pay interest and fees, it is actually a less stressful option.

Audits

Audits are, perhaps, the biggest fear that American taxpayers have. Audits are scary and can reveal that mistakes were made on previous returns. An audit can result in you owing more than you initially thought. Although rare, an audit can result in a refund if it is found that you shorted yourself.

Higher Taxes

It seems that Americans are paying more taxes almost everywhere, even at a local retailer. Higher taxes should be expected as the U.S. has had so many fluctuations in personal income tax rates over the last decade.

Conclusion

You do not have to have fears about filing and paying taxes. It is something that everyone has to do. Prepare yourself for owing the IRS by putting a little extra away each week. It makes the burden more surmountable later.

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Which Presidential Candidate Has the Best Tax Plan?

As it gets closer to election time, presidential candidates are voicing their tax plans for the American public to stew over. Tax plans on the democratic side seem to be raising taxes across the board. Most republican candidates are simply making adjustments to existing tax brackets.PresidentialRace2016

Individual Income Tax Plans

Ted Cruz seems to have a tax plan that will help more Americans with poverty-level income and those barely making ends meet. He has proposed a 10-percent flat tax on income. Donald Trump and Marco Rubio have established three tax brackets, taxing high earners the most.

Hillary Clinton plans no changes other than a 4-percent surtax for those earning $5 million or more. Bernie Sanders plans to raise taxes with the lowest bracket being 37-percent.

Republicans plan to eliminate estate taxes altogether and democrats plan large increases on estate taxes.

Business Income Taxes

On a corporate level, there is not much discussion regarding taxes. Many candidates have no specific proposal at all. The republican candidates are the only ones with some kind of corporate tax plan. Both Trump and Rubio have proposed lowering corporate taxes. Cruz plans to replace the income tax with a 16-percent business transfer tax.

It is not easy to know precisely which tax plan is best for the American people taken as a whole. Those who are barely making ends meet would not benefit from increased taxes. Lowered income taxes would mean that the economy could flourish because more Americans would have a few extra dollars in their pockets to spend on entertainment, travel and in local economies.

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You May Lose Your Passport if You Don’t Pay Your Taxes

The US government is making it harder than ever before to have outstanding tax debts. Under a new law, Americans could be forced to forfeit their passports, or have outstanding applications rejected, should they have bills to pay to Uncle Sam.PassportPic

The Current Tax System

This actually isn’t a new concept. People who are currently under tax liens already lose their passports to stop them fleeing the country with their assets. Under the new rules, a tax lien wouldn’t have to be issued before a passport is revoked.

What’s the New Threshold?

The new rules would state that anyone with $50,000 or more outstanding would be eligible to lose their passports. This has big implications for Americans all over the country, but it also has even bigger implications for Americans abroad.

Even though Americans may live abroad, they can currently avoid paying tax bills by staying away from the country. This new legislation would enable the US government to revoke passports, thus stranding the person abroad and forcing them to come home.

It’s unclear how many Americans would be affected. Currently, about seven million Americans work abroad, but it isn’t known how many of them have current debts.

If Implemented…

If the bill passes, we will see it come into force on January 1st 2016. The key clause in the legislation states that this would immediately apply to preexisting debts. Americans with tax debts who are already struggling to pay would be forced to surrender their passports.

It’s yet another weapon on the US government’s arsenal for defeating tax avoidance and evasion.

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How Tax Rates & Brackets Will Change in 2016

It is essential that you know how the tax system is going to change ahead of time. This will help you plan so you can pay as little as possible. 2016 will see a number of alterations to the tax system, and we are going to look at some of the more important alterations below.TaxRatesCharters2016

Singles

Single people can now earn $9,275 before they have to leave that precious 10% income bracket. Remember, this only applies to taxable income.

Couples

Couples can earn up to $18,550 in taxable income before they have to pay above 10% of their income. This also applies to surviving spouses. It does not apply to couples who decide to file individually, however.

Deductions and Exemptions

In 2016, the standard deduction for heads of household will rise to $9,300 from $9,250. The other standard deduction amounts for other taxpayer categories will remain unchanged.

Personal exemptions go up to $4,050 in 2016, which is an increase from $4,000 in 2015. The Alternative Minimum Tax exemption goes up to $53,900 for singles and $83,800 for married couples who decide to file jointly.

Other Major Changes

The other major changes are as follows:

  • Maximum Earned Income Credit is $6,269, up from $6,242.
  • The monthly limit for transportation benefits has stuck at $130. For qualified parking, the amount has gone up to $255, which is an increase from $250.
  • Foreign earned income exclusion is $101,300, which is an increase from $100,800.

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The Worst States for Paying Taxes in 2015

On average Americans, pay about $17,000 in taxes each year. While this may seem like a lot imagine if yoMapUnitedStatesu had to pay more. Today we are discussing some of the worst states for paying taxes in 2015.

Maine

Maine ranks in #10 in the country when it comes to taxes. If you are able to move to New Hampshire or Massachusetts, you will find that your tax burden would be lower.

Iowa

Iowa has the #9 spot when compared to other states. If possible, you may consider moving to South Dakota because you will receive a tax bill that is approximately $3,700 on average.

New Jersey

New Jersey comes in #8 and residents here can expect to pay about $8,830 in taxes. However, just over in Delaware residents are enjoying an average tax bill of $5,195.

Connecticut

Connecticut has the #4 spot and it’s no surprise that residents here can pay over $9,000 in taxes. However, what is shocking is the average household income is $48,000.

Nebraska

Nebraska takes the third slot on the list, because residents spend about $9,400 each year on state and local taxes. Wyoming, one of the neighboring states only asks their residents for a little over $2,000 a year though.

Closing Thoughts

If you live in one of the states that we have mentioned today and feel like you are paying too much in taxes, it may be time to consider a move. Check out some of the neighboring states and you may be surprised to learn that they pay less than half in state and local taxes than what you pay now.

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NPR’s Social Media Experiment

Huddleston Tax CPAs is an accounting firm in Bellevue, Redmond and throughout the greater Seattle area.

This is Lauren Katz: https://twitter.com/laur_katz. She works for NPR and it was her idea to see what would happen if NPR “swapped humans for robots” late last month.

Katz’s idea came from manually tweeting out select stories from NPR’s RSS feed at night after they’d already been tweeted by the automatons. Apparently, people pick on the human touch and she noticed increased engagement with her manual tweets. This positive reception convinced her that livetweeting NPR’s entire tweeter feed for 5 days would be a good idea.

 

npr for redmond blog

 

“During the five days of manual updating, there were 142,219 visits to NPR’s website from @nprnews tweets — a 45 percent increase from the average (98,213) of the five weeks leading up to the experiment … Links tweeted by @nprnews were clicked on nearly 100,000 more times than links shared automatically the week before, information from its bit.ly account revealed. And the account gained 5,010 followers — about 14 percent more than the week before.”

Those are amazing numbers … and certainly a great PR stunt … which obviously you can’t rule out as a factor in the spike of followers and retweets, but a 45% increase? That’s huge, and more importantly it’s entirely organic and sustainable. Those followers, after all, were picked up fair and square–with engaging content.

There were some drawbacks, of course … Primarily, the intensiveness of livetweeting for a national news organization “every eight to 10 minutes.” Katz said:”…I found it really hard to write human tweets and keep up with everything else I was doing. I did it, and we were there all week, but it takes more manpower if we want to continue it.”

The  question then for NPR is how practical would it be to continue with livetweets? Maybe a mix of automatic RSS tweets and livetweeting?  What do you think? Leave us a comment in the comment section …

If you enjoyed this article, why not follow us on Twitter and friend us on Facebook while you’re at it? You can always expect interesting, engaging content on our blogs!

Source: http://www.niemanlab.org/2014/05/its-alive-what-npr-learned-from-turning-its-nprnews-twitter-account-from-a-bot-into-a-human/

2014 World Cup Begins This Week in Brazil!

Update 7/10/14: Argentina and Germany will compete Sunday in the World Cup final. After Germany’s thorough 7-1 victory over Brazil in the quarterfinal, which didn’t necessarily send an entire nation into psychological tailspin, many are predicting Germany will take home the FIFA World Cup trophy. Apparently, so is Cortana–Microsoft’s Siri equivalent and 9 year old Nathaniel Hill from Queens. We know, we know all of this sounds a bit strange, but hey it’s the Internet!

Soccer: [sok-er]

noun

a form of football played between two teams of 11 players, in which the ball may be advanced by kicking or by bouncing it off any part of the body but the arms and hands, except in the case of the goalkeepers, who may use their hands to catch, carry, throw, or stop the ball.
1890–95; (As)soc(iation football)  + er7

 

Yes, this week we’re discussing “soccer.” To say were “discussing” soccer really isn’t vague enough for what we’re doing, though. It’s more like here are some random interesting facts related to soccer and the World Cup which kicks off Thursday afternoon.
For example, if you’re interested in a quick history of why Americans say soccer read this brief history from Paul Gerald, a “breakfast guy:
Over in America during [the late 19th century], … in rugby football they were starting to throw the ball forwards and do all sorts of other things, leading to a new game they called American Football. But this was confusing people with Association Football [present day soccer], so they adopted the English slang “soccer” for the latter in about 1920s, and started calling the game where they hardly ever kick it “football.””
If you’re curious as to where the English slang developed, give this note from the Notes&Queries section of the Guardian a quick read. Hint: (As)soc(iation football) + er= soccer.
Ah, linguistic history and sports. The odd couple of every accounting blog.

As we mentioned, furthermore, Thursday kicks off the World Cup … The first game should be a good one considering tournament favorite Brazil is playing, and will be taking on Croatia at the Arena Corinthians in Brazil’s second city of São Paulo, which is rioting like crazy, actually.

The American team arrived in Sao Paulo yesterday and next week will begin play in “the group of death” attempting to battle their way out of an intensely difficult group that includes Germany and Portugal–both of whom have legitimate shots to win the entire tournament–along with Ghana, a good African side that has earned a reputation as destroyer of the American dream. Go USA!

If you’re curious to see all of the World Cup’s drama play out like daytime TV, here’s the television schedule for the entire tournament. You’re welcome.

Be sure to catch a game or two … the tournament only comes around once every 4 years, after all. On the other hand, we’ll be back next week with updates, and we’ll tell you all about it. In any event, stay tuned.