Cris Mooney
A Personal
Web Page:
"Of course, that's just my opinion,
and I may be full of shit"
- Dennis Miller -
Since this opinion was considered
in great detail, it will be difficult to change my mind.
However, it's not impossible. I am always open to
reason. I welcome well thoughtful, logical, response.
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Recorded Nov 28, 2012
Amazon Implementation of PA Sales Tax
In 2012 Pennsylvania pressed Amazon to help collect
"sales" tax that internet sales have bypassed/hidden,
apparently as the next step beyond last year's warning
folks that they were responsible for unpaid sales tax on
their income tax (allowing an income based "fixed-guess"
of $7-$83 in Allegheny if you did not have required
records - http://forus.com/csm/Misc/snap/PA2012-Use-Tax-Calculation.pdf).
Confused by Amazon's tax on purchases, I found the
post http://tinyurl.com/AmazonPATaxMyShoes
and was prompted to research and contribute.
My addition to http://tinyurl.com/AmazonPATaxMyShoes:
> be sure to check the bottom
line
Good luck with that.
Amazon and PA have made the bad PA sales tax scene even more
worse.
It is not only that Amazon may mistakenly charge tax on some
items (tax exempt "shoes"), it is that you will not know
and you may further
be misled into not knowing when you might owe more tax!
The tax on multi-item orders is obscured such that neither
mistakes like "shoes", nor uncollected tax, are apparent -
instead one is lead to believe all is complete and right.
This is aggravated by Amazon, for its own benefit, in that
they encourage you to group order items using shipping
incentives. The system is stacked against the buyer through
complex and unintuitive tax rules and rates that are
aggravated by Amazon's not showing details, to benefit our
state and Amazon, breeding justifiable consumer apathy,
errors, and inequitably.
This is NOT cool! Given the number of purchases most
customers make, it is already unreasonable that one must "be
involved" in tax on each item. Here it is even more absurd
that one must kill themselves unraveling order items, and
then have to apply "rules" on each to do so (both Amazon and
our state are implicated here).
Side note: the
issue here is not about state revenue
through taxation, but about laws and equability.
Laws should apply evenly to all, be they taxation or
other. Here talk is about how one individual buying
a "thing" is not paying the same sales tax as
another buying the same "thing". The issue of
taxation itself, including set rates, is another
topic, for another time, and so do not let it
distract for the equability issue here. However, the
morality of misleading individuals from following
the law is relevant here, especially under the
disguise of "helping them follow it", since it
directly impacts equitable application of the laws.
The tax rules and rates one must apply to figure this out
are insane, but I was prompted by the thread at http://tinyurl.com/AmazonPATax-nonCents
to figure them out and apply them to two of my more
interesting orders to audit Amazon's apparently top-secret
techniques. Essentially the tax was right, but it was hard
to figure out, and I would have never known I owed another
$0.44 in tax if I had not done all this work. Given Amazon
seems right, it baffles me why they are not more
forthcoming. I mean, they appear to have done all the hard
work to figure it out, so why not just show some simple info
and notes?
Reviewing a couple orders, with tax codes and rates, I
conclude as of Nov 2012:
- Tax is only calculated for taxable items, for
some specific list of vendors (as noted in the original
article). I presume these lists change all the
time.
- Tax is calculated "per item", yet only the
order tax total is shown. With rules for tax applied to
each item's vendor and product category, not breaking
tax down substantially defeats the purpose of showing
tax at all. The total is barley informative beyond
"trust me", and misleads one into always believing all
tax is paid, and is only very painfully audit-able. You
may never know if the tax is wrong, or right - you may
never know to ask.
- Further obscure
technical note: tax is applied to each item
individually, even breaking out "multiple"
units (3 of the same "thing" items, shown as one
line item, are each calculated individually).
While the tax code example in 34.2(a)(3)(ii)
shows taxable items combined and then tax
applied, Amazon's unique business model of
grouping invoices (to both consumer and vendor
benefit) might justify breaking down each item
for tax, but this is debatable and I welcome
anyone digging deeper in the tax code to find
clarification. From what I have seen, I think
large stores like Giant Eagle do it this
way. And what about the 1%
Allegheny tax that the state
tax rate insists on at the bottom? What
does "if applicable" mean? Is Amazon granted
an exception, or am I responsible?
- Fractional pennies in tax appear to be calculated
right. However, the applicable "Sales and
Use Tax Rates" are not intuitive and thus a casual audit
would lead one to conclude otherwise (http://tinyurl.com/AmazonPATax-nonCents).
Amazon aggravates this by not showing the breakdown, nor
pointing to the rates applied. Tax rates for pennies are
an obscure "tax
table", rather than a more intuitive "round"
(or even the lesser used mathematical ceiling
or floor). The result is tax that tax is randomly
"all over the place". But, that is what our state
specified. Sadly, Amazon inexplicably makes the whole
deal worse by not offering details.
- Further obscure
technical note: the 1% Allegheny tax that
the state
tax rate insists on at the bottom is
unclear about how to apply this to pennies,
which is fortunate since Amazon is not dealing
with it. But... what about me? Does
one just do the 1% on dollars and then use the
6% chart for pennies... or apply the
"above-bracketed" 6% chart for "%1"... or what
- it is non-sensical? One more nail in
the coffin of this brain-dead PA sales tax
implementation.
- Further obscure
technical note: items #2 and #3 are
muddied by the fact that the absurd income
tax form blows off any rules of
calculating tax on individual sales, and any
application of partial cent rules for state
tax rate. One more nail in
the coffin of this brain-dead and
inequitable PA sales tax implementation. Where
calculated, Amazon is certainly more equitable
than the brain-dead tax form's "can you give us
something?"
The bottom line: tax is not shown per item, and in turn
calculations and exemptions are not apparent. This makes it
a very serious challenge to evaluate the tax, with
complexities both in math and rules. Every time one buy
things, one is discouraged from auditing, and
knowing if they owe more. For example: tax is
calculated/collected only for some sellers (like "Amazon
LLC", see http://www.amazon.com/gp/help/customer/display.html?nodeId=468512),
but how do I know offhand that no tax was collected on an
item for this reason or because the item is not taxable
(never mind even knowing that tax was not collected on an
item)? Since Amazon has done "half a job", but knows all the
info, shouldn't they make this clear on the order which
items they have handled, which are not taxable, and which
are up to me? Should I have to figure that out by going
through each line item and comparing the products and
vendors to some lists and applying complex math and rules?
Amazon's success is in part due to making ordering items
from various sources seamless, but here it becomes a
drawback, worse than simply "not doing tax" - wherein at
least we knew the order was problematic.
However, regarding any possible Amazon profit motivation: in
the end, according to the code, if Amazon collects too
little then they are responsible for paying the state the
difference, and if they collect too much (and do not refund)
then they must pay the state the collected amount. Either
way, no windfall to them... assuming someone at the state
IRS is watching and can figure it all out too!
My more opinionated conclusions:
Amazon should not be forgiven their obfuscation
(no line item tax listing, no help with tax "not collected")
and condescension
(no explanation like this made convenient, and their
reported poor attitude to inquiry and resolution). Amazon
could solve a vast amount of the problem without
significant impact to itself by noting each line item
as nontaxable, taxed, taxable-but-not-taxed, and offering a
detailed invoice with a click that breaks down tax as
applied by line item (which could also offer a "tax due not
paid" and references to tax rules applied).
Slightly
tangential: this obfuscation is not an unprecedented
technique for Amazon, which is simply pursuing a
manipulative precedent set with shipping. Shipping
is not broken down in your "cart" for very good
reason. Evaluation of what motivates that obvious
parallel, and its implication they will
address this one, is left to the reader, since I've
already been too verbose.
However, all this all goes back to the unreasonable
obligation we, through our government we elected, have
imposed on ourselves by legislating taxes in such a complex
manor that collection is not feasible. Our expecting
citizens and businesses to calculate, account, collect, and
pay sales taxes on the multitude of individual purchases
made in a year, with multitudes of rules (exemptions, tax
table, ambiguous calculation order, and state border issues)
is ludicrous. The only result can be unfair/inequitable
taxing, for which it not reasonable to hold any individual
or business accountable (and thus the IRS barely has). So,
while one is legitimate in checking each transaction and
correcting it if they can, no anger or penalty is
appropriate (barring discovery of intentional fraud to
benefit them).
This "sales tax" that our elected representatives put in
place is absurd and implicitly inequitable because it is too
complex to be to implemented. When I mentioned an article
about erroneous sales tax on "shoes" to a resident, they
replied "shoes are not taxable?" Can you blame them? This
sales tax system is essentially entrapment. Is it based on
"original sin", or what?
The implicit sales tax system failure is both acknowledged and
aggravated by the fact that this over-the-border issue
has been ignored too long by the PA IRS, meaning tax has
consciously been inequitably collected. The current attempt
to "implement" it now has further made obvious ways in which
it sucks, which is why it was ignored. Instead of
pushing the "bad tax", it should be fixed. We need to
make that happen, or accept the crap as our own fault.
And further, since our own legislation made this mess,
vendors like Amazon should be forgiven unintentional
mistakes that do not give them a windfall. Amazon's tax "per
item" may be a mistake, but it may also be right (or are
least "ambiguous" and thus allowable). If it is wrong, it
seems a legitimate mistake that might be forgiven if the
state finds it wrong and they correct it, and they don't
take some windfall in the process. Our failure to pay taxes
we don't even know about, or can barely even figure out,
should be treated the same way.
References:
PA "Sales and Use Tax Rates (REV-221)" ("sales tax table"
for pennies)
http://www.portal.state.pa.us/portal/server.pt/document/737279/rev-221_pdf
PA Code TITLE 61 "Revenue", PART I, Subpart B, Article II
Chapter 34. Registration, Recordkeeping and Returns
Paragraph 34.2. Keeping of records.
http://www.pacode.com/secure/data/061/chapter34/chap34toc.html
(a)(3)(B) - Had the vendor incorrectly determined the tax at
less [...], he would nevertheless be liable for payment of
the correct amount. If he had collected more [...] he would
be liable to the Commonwealth for the amount collected
unless he showed that he had refunded the overcharge to the
purchaser.
(a)(3)(ii) Example:
1 Coffee percolator $16.80
2. 1 hacksaw $4.25
3. 1 pr. doorknobs $3.10
Total: $24.15 -> sales tax $1.45
Tax for $4.15 is: $1.44 on $24, and $0.01 from tables
on $0.15
My example orders used to audit (view with fixed width
font like "courier"):
Order 1, Nov 18, 2012:
(6%) (round)(ceiling)(PA Table)
$13.95 -> 0.8370 (0.84) (0.84) (0.84)
[Paperback] Sold by: Amazon LLC
$08.39 -> 0.5034 (0.50) (0.51) (0.51)
[Automotive] Sold by: Amazon LLC
$08.21 -> 0.4926 (0.49) (0.50) (0.50)
[Lawn & Patio] Sold by: Amazon LLC
------ ---- ----
----
1.8330 1.83 1.85
1.85
Charged Tax $1.85 (2 cents high via "ceiling/table" vs
"round")
Order 2, Nov 18, 2012:
(6%) (round)(ceiling)(PA Table)
$08.15 -> 0.4890 (0.49) (0.49) (0.49)
[Electronics] Sold by: Amazon LLC
$08.15 -> 0.4890 (0.49) (0.49) (0.49)
[Electronics] Sold by: Amazon LLC
$19.10 -> 1.1460 (1.15) (1.15) (1.14)
[Electronics] Sold by: Amazon LLC
$19.10 -> 1.1460 (1.15) (1.15) (1.14)
[Electronics] Sold by: Amazon LLC
------ ---- ----
----
3.2700 3.28 3.28
3.26
(round)(ceiling)(PA Table)
$07.28 x 1 = 0.4368 -> 0.4368 (0.44)
(0.44) ([Electronics] Sold by: 3rd Party
------ ---- ----
3.7068 3.71 3.72
Charged Tax $3.26 (1/2 cents low vs round/ceiling. no
indication I owe 44 cents)
Note on Order 2, the "x2" items were shown as one "line
item", but not taxed that way:
$08.15 x 2 = $16.30 -> 0.9780 (0.98)
(0.98) (0.98) [Electronics] Sold by: Amazon
LLC
$19.10 x 2 = $38.20 -> 2.2920 (2.29)
(2.30) (2.30) [Electronics] Sold by: Amazon
LLC
------ ---- ----
----
3.2700 3.27 3.28
3.28
Make this info better!
I did my best here, and admit I did not finish some things
like "each item's tax calculated". Can you improve? Build on
my work with the links I found to the tax codes. Send me
info to "csm" at my domain "forus" with more stuff and we
can work to make this better.
Either way, the above text is yours to use as you please. If
you do, I only ask you try and be honest and as objective as
possible in what you write about, and that you send me any
corrections you find in my stuff so I can improve it.
Cris
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