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Government The Almighty Buck

Amazon Botches Sales Tax, Overcharges NJ 179

Hodejo1 writes "On July 1 Amazon started to charge sales tax to NJ residents, which is 7% in the state. But something was not right when I attempted to buy a book for my daughter. Just as I was about to finalize the order I noticed the charges were way off. The book cost $8.09. The tax I was to be levied was $0.85. That's a 10.5% tax rate! Why am I being charged 10.5%? It turns out that Amazon is also charging me tax on the $3.99 cost of shipping and handling. That's a problem, because New Jersey does not tax shipping and handling as I confirmed on the state's web site. I then checked a purchase I made from Amazon on October 7th of this year. Guess what? I was taxed on the $13.50 shipping and handling charge for that order. Now it is very possible — probable most likely — that this is nothing more than a coding error on Amazon's site. But it's a whopper! Just consider the hundreds-of-millions of dollars in sales Amazon makes in New Jersey each year. These extra dimes add up very quickly. Has Amazon been overcharging NJ residents' sales tax since July? If so, why haven't they picked it up by now?"
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Amazon Botches Sales Tax, Overcharges NJ

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  • by Anonymous Coward

    What do you think the "only pay for shippig&handling, nevermind its more than the product" scams are about? just another tax dodge in the land of tax dodgers.

    • Thank you.

      I have an elderly relative who fell for one of those scams, but she's feisty and, being retired, had nothing better to do than sit on the phone over multiple calls to cancel the order and get her money back.

      But it is a scam, just like banks charging you overdraft fees is core to their business model rather than a true penalty because it costs them money, and credit card companies hoping, yes hoping, you get into financial trouble so they can jack up the rates and get you permanently stuck barely m

    • by ShanghaiBill ( 739463 ) on Sunday November 03, 2013 @10:55AM (#45317437)

      NJ does tax S&H. Amazon is doing it correctly. The submitter is a moron. The reference provided in the summary to "prove" that NJ does not charge tax, actually says exactly the opposite: since 2006 they tax S&H.

      • by Runaway1956 ( 1322357 ) on Sunday November 03, 2013 @11:41AM (#45317615) Homepage Journal

        "As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable."

        I didn't actually read much of that page, until I saw your post. Then, I did a search for "shipping" on the page, and read everything that got highlighted. You're right - reading helps people to avoid making idiot posts!!

      • Stupid Slashdot. Why does this shitty site not have a way to mod down moronic submissions like this? This isn't the first time I've seen something this poorly-researched pop up on here.

        • by mcgrew ( 92797 ) *

          Stupid Slashdot. Why does this shitty site not have a way to mod down moronic submissions like this?

          It does. It's called the firehose, and you can set it up so that newly submitted stories are on the front page, with a handy + and - next to each story and a moderation for it (spam, stale, stupid, dupe, notthebest).

          • Yes, but once it's on the main page, it's stuck.

            On Reddit, there is no separate page you have to visit to moderate story submissions; all the submissions can be modded up or down at any time, so if something is stupid, it'll just get modded down to oblivion after enough people look at it and decide it's crap. Here, you're relying on people to take their time to check out the Firehose.

    • What about amazon primes shipping, or free shipping over $35. or all the books that sell for 1 cents plus $3.99 shipping. thar's commerce in that handling.

    • I don't know about NJ, but in my state they do exactly that. Whatever you charge as sales tax above the actual sales tax, whether it is deliberate or by accident, you pay to the state anyways.

      I think if it was an error on the part of a coder, then my guess is that this money is also pooled into taxes that they have to pay to NJ, so it is going to be paid to them whether they ask for it or not.

  • Are you sure ? (Score:5, Informative)

    by Anonymous Coward on Sunday November 03, 2013 @09:46AM (#45317165)

    What about this nj law
    As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.

    • Re: (Score:3, Insightful)

      by Blakey Rat ( 99501 )

      Let's apply Occam's Razor. What's more likely: a company that's been the largest online store for years charging wrong taxes, going completely unnoticed since 2006? A company that's been intensely focused on interstate tax issues in the last few years, and have incredible incentive to ensure they tax accurately to avoid giving ammo to their many opponents?

      Or some idiot (submitter or Timothy, you can take your choice) misread his own State's laws and decided to puke his unfounded outrage all over this site?

      I

  • by Anonymous Coward
    I am somewhat confused. I thought only filthy free market capitalists wanted to pay lower taxes. The liberals^W progressives are all forwardlooking and think we don't pay enough tax and see the value of paying more taxes, which is more government, which equals a better world. Why don't we ask Amazon to start charging 100% on everything to everybody? Then governments all across the US, and even the world, will have hundreds of millions or billions of dollars more with which do good.
    • Re:Tax rate too low? (Score:5, Interesting)

      by ShanghaiBill ( 739463 ) on Sunday November 03, 2013 @11:46AM (#45317647)

      I am somewhat confused. I thought only filthy free market capitalists wanted to pay lower taxes.

      As a fithy free market capitalist (FFMC), let me chime in. We FFMCs do indeed believe in lower taxes, but we also believe in sensible taxes. Taxes should be simple, fair, difficult to avoid, and should not inhibit economic growth and prosperity. So taxes on income and labor and the worst, taxes on revenue are better, taxes on property or consumption are better still, and taxes on things you want to discourage are the best of all. If you look at the things we tax in America, it would be difficult to design a dumber tax system. Most taxes are on production or profits (income tax and payroll tax), and we have some of the lowest consumption taxes in the developed world. So we end up with millions unemployed at the same time we run up trillions in deficits because we don't produce enough to satisfy our consumption levels. That is a symptom of a broken system. Unfortunately, sensible tax reform isn't even on the political horizon.

      • The problem with Checks and Balances, a diverse economy, and a population that really engages in politics is that all big changes are nigh-impossible to enact. If Obama proposed a tax reform that conservative intellectuals loved, for example replacing the income tax with a national VAT, conservative Congressman would be unable to vote for it unless it also cut revenue. The engaged people who vote in GOP primaries are universally convinced ALL taxes are evil, and all taxes are equally evil, therefore any "ta

        • I just thought I'd point out the fallacy that is normally associated with tax revenues: increased tax rates != increased tax revenues. It is highly probably that a simplified system that is more straight forward and less difficult to dodge, would actually yield higher tax revenues even if the overall rates were lower, on paper. The amount of economic productivity to be gained from a simplified system alone is likely significant, not to mention that lower taxes in general tend to stimulate the economy, and w
      • So taxes on income and labor and the worst, taxes on revenue are better

        Eh? Taxes on revenue are terrible. Yeah, they're simple, but they penalize low-margin businesses, driving capital away from highly-efficient industries.

      • by mcgrew ( 92797 ) *

        Sorry, I have to disagree with most of what you said vehemently. Sales/consumption taxes are regressive; the poor slob behind the grill at McDonald's lives paycheck to paycheck while the CEO spends only a small portion of what he "earns". Worse still is property tax; you're getting taxed over and over. I knew an elderly couple who lost their home, because it had been paid off twenty years earlier but housing prices had risen so much that the taxes were higher than what they'd been paying for the mortgage. T

    • What's really bad is that the so-called "liberals" in this country are big fans of taxes that hurt poorer and working-class people the hardest. Sales taxes are the most regressive form of taxation, yet if you look at most of the "Blue" states, they have extremely high regressive tax schemes. The only Blue states that really walk the walk are Delaware, Oregon, and New Hampshire. There's also Alaska and Montana, which are strong Red states.

  • by Anonymous Coward

    Never allow doubt to tarnish your lust for wealth

  • S&H is taxable in NJ (Score:5, Informative)

    by SpaceWiz ( 54904 ) on Sunday November 03, 2013 @09:49AM (#45317177)

    It's because S&H is taxable in NJ.

    From http://www.state.nj.us/treasury/taxation/emailfaqs.shtml

    Are shipping and handling subject to sales tax?
    Effective October 1, 2005, the law provides for a new definition of "delivery charges." For transactions occurring on or after October 1, 2005, handling charges are included within the definition of delivery charges, and are therefore exempt from tax whether or not they are separately stated to the purchaser.

    Prior to October 1, 2005, a separately stated charge for the transportation (shipping) of tangible personal property from the vendor to the customer was not subject to New Jersey sales tax. Depending on the circumstances, a separately stated “handling” charge could be considered part of the taxable receipt (amount on which sales tax is due) because it occurs prior to actual shipment. However, when “shipping and handling” charges were billed together, both amounts were considered exempt transportation charges for New Jersey sales tax purposes.

    As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.

    • by KRL ( 664739 )
      Confusing much? Welcome to the hell that is sales tax.
      • by JLennox ( 942693 )

        I assume it's to stop the 0.99cents buy price + $9.99 s/h scheme of tax avoidance.

      • So go make your purchase in Delaware.
    • In the case of Amazon's room full of lawyers vs some guy from this article, I rule in favor of Amazon's room full of lawyers. Thanks for your expert testimony, lol.
  • S&H is absolutely taxable in New Jersey, if the shipment contains taxable goods.

  • by LordNimon ( 85072 ) on Sunday November 03, 2013 @10:03AM (#45317223)
    Posted by timothy
    from the insult-to-injury dept.


    The insult is that I read another stupid post from timothy.
    • by Anonymous Coward

      Who pays for shipping anyway? Although I noticed Amazon.com recently raised the minimum from $25 to $35 to get free shipping.

  • If Amazon is overcharging on taxes for deliveries in NJ, who's getting the windfall? Amazon, NJ? All that money has to go somewhere.

    • by Anonymous Coward

      it goes to NJ. If it doesn't, then the state's auditor will find out and the additional fines/penalty would be so severe as to not make it worth it.

      Here is a tip to everyone, from someone inside the sales and use tax business: companies across America overcharge sales taxes on a regular basis. I'm talking specific sales taxes on specific TPP (tangible personal property) and services. If a rule is 'gray' and can be interpreted as either exempt or 1%, for example, then the vendor will often charge the 1%, col

      • by pspahn ( 1175617 )

        Or, even better, use a tax service that remits all your payments for you and provides audit protection. If a problem should ever arise, you point to them and go back to work.

  • Personal whinging seems to be out of place here on slashdot.

    We could fill a whole site with what Telstra Australia gets wrong :)

  • Isn't the real problem that NJ state's tax code is so expansive that its own citizens don't even know what they should or should not pay taxes on?

    Tax law is one item that Amazon is paying extremely close attention to as of late. They are actually leading the discussion for the national sales tax, because it forces their competition (eBay) to play by the same rules. Amazon is a distribution system masquerading as an online retail store. They have physical nexus and are being required to collect taxes on b

  • How about ya get Amazon Prime if you buy so much from Amazon that's worth bitching about something you have no clear understanding about. Then shipping is free!
  • by frinsore ( 153020 ) on Sunday November 03, 2013 @11:09AM (#45317505)

    As several people have pointed out Amazon appears to be applying the correct sales tax. The fact that the resident of NJ doesn't understand his own sales tax demonstrates how complex sales tax can be. Every state, county, and city can have their own sales tax laws which have to all be correctly applied based upon arbitrary characteristics. A state can have a tax rate of 4% with an additional 3% for prepared foods and then a city in that state could have a 2% tax on sugary treats. What counts as a prepared food or sugary treat? That will vary just as much and may not even follow common sense, tomatoes have even been legally defined as vegetables for tax reasons.

    A national sales tax could make a lot things a lot simpler but would force states to relinquish a lot of power as every business that could use the national sales tax instead of the local taxes would. States with high sales tax would see a large revenue drop while residents of states without a sales tax would be penalized. I could see brick and mortar stores jumping through hoops to selectively use the lower tax rate, if the local tax rate is higher then the national one they'd "order" the item for the customer and then "deliver" it from the backroom.

    The best solution I can see is if the federal government runs a sales tax database that every retailer can query. The retailer submits the location, price, item, and some relevant descriptors: "luxury", "food", "service", "book" and the API spits back what the sales tax should be for the item. It's then beholden to the states to keep their relevant data updated. The states would be limited in how creative their sales taxes could be as the software would need to support it but the states wouldn't need to cede power to the federal government.

    • No way. The problem with your solution is that there's no way to remit the taxes to the ~10,000 different tax jurisdictions across the country, unless you're the size of Amazon. Some 1 or 2-person internet shop being run out of a basement might be able to handle getting their shopping cart set up to use the Federal API you propose (it'd just be built into all the major shopping cart programs after all), but remitting those taxes requires cutting checks to all the different authorities, and there's no way

    • Actually the residents of states without a sales tax are only partially penalized, since the sales tax collected would go back to those states and in theory benefit the buyer in some other way...

      Or possibly if a state were really committed they could take money sent from Amazon for a national sales tax, and allow people to issue claims to recover sales tax. It would be a pretty good system for everyone because people that cared still wouldn't pay sales tax, while enough people wouldn't bother than the stat

  • Comment removed based on user account deletion
    • What I don't understand is that if you buy something while you're on vacation or while you're working in another state, you pay the local sales tax where you buy the product and your home state doesn't give a rat's ass about it. They would be hard pressed to prove where you bought it. But if you buy online over the "internet", your home state thinks they deserve to tax your purchase.

      If you buy something outside your state and bring it back to your home state you are expected to declare the amount on your tax return and pay a use tax on it, minus a credit for the sales tax you paid to the other jurisdiction. Exactly the same as buying things online. I live in a border town and the neighboring sales tax is 1.5% lower. Once I bought a car out of state, when I went to register it they demanded proof of tax paid and made me pay the difference before they would register it.

    • by PPH ( 736903 )

      What I don't understand is that if you buy something while you're on vacation or while you're working in another state, you pay the local sales tax where you buy the product and your home state doesn't give a rat's ass about it. They would be hard pressed to prove where you bought it. But if you buy online over the "internet", your home state thinks they deserve to tax your purchase.

      Not so in Washington State. Purchasers are still liable for paying a 'use tax' on items not taxed at the point of sale. So if you bring an item back into the state, you had better fill out the proper state tax forms and sent them a check.

      In reality, they aren't going to enforce this for minor purchases. But for major ones, they do. A friend of mine spent a couple of grand on a fancy camera in Oregon (no sales tax) about a decade ago. At the end of the tax year, the Wash State dept of revenue contacted her

  • News at 11. The included link says that yes it's taxable if the item shipped was also taxable.

  • I bet that incorrectly labelling tax is a felony. You cannot just collect a tax, and then keep it for yourself because you charged more than the government required.

    • by Greyfox ( 87712 )
      Not sure I want to be taking legal advice from someone who can't spell "Illegal" :-P

      Also pretty sure that's not illegal, as every cell phone carrier and credit card company seems to do just that on a monthly basis.

  • As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire de

  • There are 6000 different taxing entities in the United States.
    Each one of them charges different taxes on different categories of goods.
    Each one of them can use a different categorization, each one can charge different taxes on different categories or items, and the tax rate can change at pretty much any time.
    And none of them have an obligation to inform anyone about outside the State/County/City about the rate change.
    Now go write me some code that works.
  • All items bought via delivery from out of state, should simply be taxed at 10% and have the delivery company collect it. Then allow that company to keep 10% of that collection. Then divide the rest between local, state, and fed.

    Regardless, this approach solves the issue of local sales tax disappearing, and allows localities/states to focus on infrastructure. And for companies that ship, a flat 10% makes it easy to avoid dealing with major software issues.
  • And pretty much all states tax S&H.

    I noticed the charges were way off. The book cost $8.09. The tax I was to be levied was $0.85. That's a 10.5% tax rate! Why am I being charged 10.5%? It turns out that Amazon is also charging me tax on the $3.99 cost of shipping and handling.

    This is why the arguments for a national sales tax to "level the playing field" with B&M retailers are totally bogus.

    They always want to tax shipping and handling.

    Buyers from B&M retailers do not have to pay for d

  • That's a problem, because New Jersey does not tax shipping and handling as I confirmed on the state's web site.

    Which is precisely the problem with taxing internet transactions. There are almost ten thousand different sales tax jurisdictions in the US. It's ridiculous to expect Amazon to keep track of minor variations in sales tax rules for all of them.

    • by 0123456 ( 636235 )

      It's ridiculous to expect Amazon to keep track of minor variations in sales tax rules for all of them.

      Oh, Amazon can easily do it. It's their smaller competitors who can't afford to do so and will go out of business, which is why big Internet companies have started saying 'hey, let's make everyone pay sales tax on internet sales, that's a great idea.'

      The left whine and whine about the evils of Big Business, then do everything in their power to make them bigger.

  • by wonkey_monkey ( 2592601 ) on Sunday November 03, 2013 @03:15PM (#45319213) Homepage

    So it seems that the submitter of this rant was entirely wrong, and sales tax does indeed apply to the delivery costs of taxable goods in NJ.

    Will Hodejo1 or Timothy now hold their hands up, admit their mistake and promise to do better in future?

    • Will Hodejo1 or Timothy now hold their hands up, admit their mistake and promise to do better in future?

      Maybe Hodejo1, but the suggestion that Timothy might deserves a +6 Funny.

  • I'm a Washington state resident, I ordered something through Amazon many years ago;
    at the check out I was told there's a chance that a tax may be required on this item
    in the future, and if not they'd just keep the spare change (in a round about way).
    Then placed a tax to the item price.

    Yes Amazon is located in Washington state, and yes they tax in Washington but
    they weren't required to at the time, and it wasn't retroactive when they were.

    I haven't shopped Amazon since, NewEgg.com all the way, put many comp

  • As a side note: every time someone mentions buying something they Mention newegg.com
    very rarely Amazon.com I don't see why Amazon.com is always talked about and little about
    Newegg.com. Other than Amazon pays for the press.

    Chatting while playing games for many years, if someone says damn this sucks I need a new
    video card (a common complaint), almost always someone mentions a deal on Newegg.com,
    never has Amazon been mentioned. I don't know why, it's just the way it works.

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