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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: H James Morris who wrote (3839)	5/3/1998 1:38:00 PM
From: Glenn D. Rudolph	Read Replies (8) \| Respond to of 164684

Amazon, for the foreseeable future, does have a major advantage over their brick & mortar competitors. As I understand it, Amzn currently only has to charge its Washington State customers a sales tax. H J, This is not quite correct. It is correct that AMZN is only charging state sales tax in Washinton State. However, almost all states have reciprocal sales tax agreements. Quill corporation is a office supply mail order company based in Illinois and they were only charging sales tax on sales made in Illinois. Quill became "famous" for the tax savings. Their sales grew and were approaching $1 billion/year. Twenty six states filed a class action suit to collect the unpaid sales tax. The states one and Quill could not back charge their customers for the sales tax. Quill paid the 26 states $56 million in sales taxes proportionate on sales and Quill began charging sales tax in all states from there on in. Their competive advantage decreased and profits dropped. Recently Staples bought Quill out. This will occur to AMZN too. The states are not going to bother bringing litigation until the sums owed are significant and then AMZN will have to pay the states for all uncollected sales tax. I anticipate this will occur within a year. B & N are not charging sales tax in most states now from web based orders but they are aware it will someday be due but they can afford to comeup with the money. They are not charging the tax to compete with AMZN during the short term. This will occur and where will AMZN get the cash? Glenn