A lot of people have written asking about this “deal” that Nevada Gov. Brian Sandoval cut recently with Amazon.com in which the e-tail giant will begin collecting taxes on your Internet purchases and remitting them to the state.
First, to be clear, technically this is not a “new” tax or a tax “increase” – though Nevadans absolutely will be paying higher taxes after the deal takes effect than they were paying before Sandoval was elected.
You see, without the support (or, really, knowledge) of the people of the state of Nevada, the Legislature long ago passed what is called a “use” tax that you are supposed to voluntarily pay on your out-of-state purchases – online, mail order and even in person under certain circumstances.
As such, whether you drive to California and buy a t-shirt or order that same t-shirt online, you are supposed to calculate the Nevada “use” tax on that t-shirt – which, not coincidentally, is the same rate as your local/county/state “sales” tax – and send a check to the government.
So if the t-shirt cost you $20 and the “sales” tax rate in your county is 8.1%, you’re supposed to remit a check to the Nevada state government for $1.62 if you buy the shirt online. But again, it’s not called a “sales” tax because charging a sales tax on that purchase is prohibited by Article 1, Section 9 of the United States Constitution which reads:
“No Tax or Duty shall be laid on Articles exported from any State.”
So if the company “exports” (ships or mails) a t-shirt from its store in California to you in Nevada, no sales tax can be charged on that item being shipped across state lines. So here’s the sneaky little thing Nevada’s legislators did:
Instead of calling it a tax on the “sale” of the item being “exported” across state lines, Nevada instead says it’s charging a “use” tax on that product since you will be “using” it here in Nevada. So even if you buy so much as a toothpick online from an out-of-state company for “use” in Nevada, the government says you have to pay the government a tax on that purchase.
Just don’t call it a “sales” tax (wink, wink).
Alas, because of that pesky Constitution thing, Nevada can’t force out-of-state e-tailers to collect this tax from you on its behalf. So Nevada has to rely on you to voluntarily remit the taxes you “owe” for the privilege of “using” your t-shirt or toothpick in Nevada.
Which almost no one knows…and even fewer, if any, do.
Which is why Gov. Sandoval and state legislators have been pressuring e-tailers like Amazon to collect the “use” tax for them from you because they know doggoned well that you didn’t sign up for this Internet tax and ain’t about to start paying it voluntarily.
In fact, this issue has actually been on the ballot in Nevada and Nevadans have DEFEATED it. So there is NO DOUBT that Nevada’s citizens do NOT want this tax that legislators have imposed on their out-of-state Internet and mail order purchases for “use” in Nevada.
And yet, Gov. Sandoval has been twisting Amazon’s arm trying to force the company to “voluntarily” force you to pay up. Why? Because he knows if he can bend a giant like Amazon to his and the Legislature’s will, all the “little” e-tailers will eventually be forced to fall in line, as well.
The other reason is that without Amazon’s “voluntary” cooperation, Sandoval and state legislators know it will be virtually impossible to force the company to comply since it’s highly unlikely that Congress will pass a federal law enabling this “use” tax loophole to get around the Constitution.
One final note: The other 800-pound gorillas pushing this “Amazon tax” are the big-box, brick-and-mortar retailers such as WalMart and Best Buy. They are trying to frame this as a matter of “fairness” since they have to charge and collect sales taxes on purchases made in their Nevada stores and out-of-state e-tailers do not.
It’s a bullspit claim since e-tailers are at a competitive disadvantage in that they have to pay or charge for shipping, and customers can’t buy on impulse. They have to wait for delivery. So this “fairness” issue is just a smokescreen. This is just an effort by the big box stores to use the government to screw their competitors – you know, the way they screwed the little mom-and-pop brick-and-mortar stores years ago.
Anyway, the bottom line is this: No matter how you slice it, if Internet and mail order purchases are taxed – whether the tax is called a “sales” or a “use” tax – YOU are the one who is going to pay it. Not Amazon. Not WalMart. And not Best Buy. YOU.
You don’t want this tax. You didn’t agree to this tax. You’ve actually voted to reject this tax. And you’re not “voluntarily” paying this tax. But Gov. Sandoval is trying to shove it up your wazoo anyway.
Wouldn’t it be nice if our self-proclaimed “conservative” governor actually took the side of taxpayers over the government for a change?
Don’t hold your breath waiting.