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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 226.99-1.1%3:59 PM EST
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To: marion (Hijacked) who wrote (3841)5/3/1998 1:03:00 PM
From: Jan Crawley  Read Replies (2) of 164684
 
In fact, this whole issue became a "gold mine" for State Revenue Departments. You might not think they will go after individuals on this, but they do go after businesses on this. Since you are responsible for the tax, they can also levy penalties against you.

This is very true. For the past 3 years or so some businesses here have been setting up "State/city sales tax payable" accounts to incur an expense whenever the vendors'(the Web vendors, out of the state vendors) invoices do not include applicable sales taxes. We then pay the taxes to the State/City revenue collection agency directly. The only materiality here is "the amount of tax revenue in relationship to the compliance costs.

Now, apply the above to Amzn:

1. Sooner, but not later Amzn(and others) will have to collect and pay the applicable taxes. Revenue growth demands the compliance.

2. Currently, the exclusion of sales tax is a Revenue Advantage to Amzn, not a cost advantage, and has somewhat enabled Amzn to Lose a little less on it's bottom line.

3. The most important issue here, will Amzn's revenue growth be materially reduced if the State/local sales tax advantage is removed. We are talking an average of 7 to 8 percents sales tax rate here.
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