April 10, 2006 2:28 PM PDT

Amazon prepares for online taxes

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Amazon.com employees have developed a tax figuration system in the event that the company will have to tax online shoppers internationally and at home, according to U.S. Patent and Trademark Office and European Patent Office documents.

Patent No. 20060036504 is for a tax figuration system that classifies retail items, automatically and dynamically imports the tax code for that classification of item depending on destination, and then assigns taxation to that item being delivered.

While the patent was published Feb. 16, 2006, it was first filed in August of 2004, in accordance with the usual 18-month process for U.S. patents.

The U.S. patent can be found on the European Patent Office Web site, along with a series of claims for a European patent.

"Items are classified so as to select an appropriate import tax code for a destination country and/or to select an appropriate export tax code for an origination country, such as to allow calculation of estimated taxes for the items before the items are delivered," says the patent description.

Amazon currently uses this type of system for calculating the VAT (value added tax) on items shipped from its Amazon.co.uk Web site.

While the patent concentrates on international shipping-tax algorithms, a similar system for state-tax imports is foreseeable.

Proposed legislation in the U.S. seeks to make many American online retailers responsible for remotely collecting taxes at the time of purchase. While some proposed bills have included a small business exemption, or state-by-state opt-in clause, large national retailers like Amazon will most probably be forced to collect taxes should a bill pass.

"We have a policy of not commenting on our patent applications," Patty Smith, director of corporate communications for Amazon, replied in response to a request for comment.

See more CNET content tagged:
tax, Amazon.com Inc., patent, retailer, small business

28 comments

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I order from Amazon because free ship and no taxes
The day I get ripped of for paying sales taxes, is the day I stop buying from online sites that charge me sales taxes.
Posted by bobby_brady (765 comments )
Reply Link Flag
Tax is life and keep in mind that nothing ships for free.
Tax is life and keep in mind that nothing ships for free.
Posted by mammalthedog (10 comments )
Link Flag
Taxes aren't the end of the world
So you'll happily pay your tax at a local store but won't at an online one? Buying from a web store isn't just about price. You can also save a ton of time by not going to the store, you can compare pricing at a bunch of stores in two seconds, and you also can send gifts directly to a person without going to the store then going to UPS/FedEx/USPS.

I don't like paying taxes as much as the next guy doesn't. However, taxes keep the lights on, the streets paved, etc. You may want to think again about how taxes from an online tore aren't that bad.
Posted by snertagert (6 comments )
Link Flag
I order from Amazon because free ship and no taxes
The day I get ripped of for paying sales taxes, is the day I stop buying from online sites that charge me sales taxes.
Posted by bobby_brady (765 comments )
Reply Link Flag
Tax is life and keep in mind that nothing ships for free.
Tax is life and keep in mind that nothing ships for free.
Posted by mammalthedog (10 comments )
Link Flag
Taxes aren't the end of the world
So you'll happily pay your tax at a local store but won't at an online one? Buying from a web store isn't just about price. You can also save a ton of time by not going to the store, you can compare pricing at a bunch of stores in two seconds, and you also can send gifts directly to a person without going to the store then going to UPS/FedEx/USPS.

I don't like paying taxes as much as the next guy doesn't. However, taxes keep the lights on, the streets paved, etc. You may want to think again about how taxes from an online tore aren't that bad.
Posted by snertagert (6 comments )
Link Flag
Online Sales Tax = NO SALE !!!
Let's face it folks. We order online because once you do the math, shipping turns out to be cheaper than the sales tax we may pay at the brick and mortar store. So, why would I want to pay shipping and sales tax for???

Amazon is losing millions of dollars on free shipping already. I'm sure they can't afford adding another strike against them.

No sales tax is the bait for people to shop online. But, Apple charged me sales tax last week for ordering an iPod Mini. So, maybe the whole nonsense has already started.

Unless I get free shipping, I'm buying locally.
Posted by Dead Soulman (245 comments )
Reply Link Flag
They have a presence
An Apple store or a sales office in state qualifies as a presence.

Stopped buying from MacMall because they purchased a warehouse
from a bankrupt local retailer (but not the stores) and I was subject
to the tax.
Posted by dkluszter (6 comments )
Link Flag
Online Sales Tax = NO SALE !!!
Let's face it folks. We order online because once you do the math, shipping turns out to be cheaper than the sales tax we may pay at the brick and mortar store. So, why would I want to pay shipping and sales tax for???

Amazon is losing millions of dollars on free shipping already. I'm sure they can't afford adding another strike against them.

No sales tax is the bait for people to shop online. But, Apple charged me sales tax last week for ordering an iPod Mini. So, maybe the whole nonsense has already started.

Unless I get free shipping, I'm buying locally.
Posted by Dead Soulman (245 comments )
Reply Link Flag
They have a presence
An Apple store or a sales office in state qualifies as a presence.

Stopped buying from MacMall because they purchased a warehouse
from a bankrupt local retailer (but not the stores) and I was subject
to the tax.
Posted by dkluszter (6 comments )
Link Flag
Not Amazon.com's Fault - Will Stay A Customer
If legislation forces online retailers to charge state sales taxes, I will still shop at Amazon.com. On the products I buy, they offer excellent prices, and free shipping.

I'm not a fan of paying taxes, but the current situation puts bricks-and-mortar retailers at an unfair competitive disadvantage.
Posted by john55440 (1020 comments )
Reply Link Flag
Brick and Mortar Stores already a Ripoff!!
Lets be honest, if you shop online its because you dont want to pay for all the overhead equity for Employees in blue tshirts at Bestbuy with bright lights and expensive store displays, any item in Retail stores generally charge close to the MSRP and I for one WILL NOT PAY those inflated prices!. With that said, online was the last forage for discounted pricing without the "assistance" of a stupid clerk who doesnt know his product. If they start charging tax they will kill the only good deals still out there, its time for a payoff to big government!
Posted by zincmann (153 comments )
Link Flag
Not Amazon.com's Fault - Will Stay A Customer
If legislation forces online retailers to charge state sales taxes, I will still shop at Amazon.com. On the products I buy, they offer excellent prices, and free shipping.

I'm not a fan of paying taxes, but the current situation puts bricks-and-mortar retailers at an unfair competitive disadvantage.
Posted by john55440 (1020 comments )
Reply Link Flag
Brick and Mortar Stores already a Ripoff!!
Lets be honest, if you shop online its because you dont want to pay for all the overhead equity for Employees in blue tshirts at Bestbuy with bright lights and expensive store displays, any item in Retail stores generally charge close to the MSRP and I for one WILL NOT PAY those inflated prices!. With that said, online was the last forage for discounted pricing without the "assistance" of a stupid clerk who doesnt know his product. If they start charging tax they will kill the only good deals still out there, its time for a payoff to big government!
Posted by zincmann (153 comments )
Link Flag
"Online Shopping" is really just MAIL ORDER
It is the same thing as calling up JCPenney or QVC on the one the phone or filling out a paper form from a catalog and mailing it to some mail order place.

Why are "online" business being singled out for this sales tax collection?
They are following the same sales tax rules as any other mail order buying process from another state.
Posted by chrisx1 (201 comments )
Reply Link Flag
"Online Shopping" is really just MAIL ORDER
It is the same thing as calling up JCPenney or QVC on the one the phone or filling out a paper form from a catalog and mailing it to some mail order place.

Why are "online" business being singled out for this sales tax collection?
They are following the same sales tax rules as any other mail order buying process from another state.
Posted by chrisx1 (201 comments )
Reply Link Flag
Ridiculous Patenting
How it comes that a patent could be granted for calculating a sales tax using the Postal code of the buyer and a table of tax rates. It is understandable that internet sales do not need to be tax free, but patenting how to calculate it is insane. What about the patent to calculate different VAT rates (by product and country!!). is Amazon planning to sue all websites for calculating internet taxes!USPTO really need reforms. I just hope the patent will be flatly rejected in Europe
Posted by (5 comments )
Reply Link Flag
Ridiculous Patenting
How it comes that a patent could be granted for calculating a sales tax using the Postal code of the buyer and a table of tax rates. It is understandable that internet sales do not need to be tax free, but patenting how to calculate it is insane. What about the patent to calculate different VAT rates (by product and country!!). is Amazon planning to sue all websites for calculating internet taxes!USPTO really need reforms. I just hope the patent will be flatly rejected in Europe
Posted by (5 comments )
Reply Link Flag
Ridiculous Patent
This takes the cake for audacity. We're not only to be harmed by taxation; we're to pay licensing fees in order to be so harmed.
Posted by cyrano71 (6 comments )
Reply Link Flag
Ridiculous Patent
This takes the cake for audacity. We're not only to be harmed by taxation; we're to pay licensing fees in order to be so harmed.
Posted by cyrano71 (6 comments )
Reply Link Flag
Software Patents kill software innovation
The US Patent office has been handing out patents for software "ideas" that are trivial and obvious. In the hands of a small software firm, a trivial patent is worthless (not enough money to keep a legal team chasing "infringers"), but in the hands of a large company like IBM, eBay, Amazon or Microsoft, that same patent can be used as a club to beat smaller firms to death.
Posted by Arbalest05 (83 comments )
Reply Link Flag
Software Patents kill software innovation
The US Patent office has been handing out patents for software "ideas" that are trivial and obvious. In the hands of a small software firm, a trivial patent is worthless (not enough money to keep a legal team chasing "infringers"), but in the hands of a large company like IBM, eBay, Amazon or Microsoft, that same patent can be used as a club to beat smaller firms to death.
Posted by Arbalest05 (83 comments )
Reply Link Flag
Sales tax
MN has a "USETAX", on line, mail order, most any purchases in excess of $770 per year MUST be declared and filed with tax payment of 6.5% plus any add-on fractions for certain localities for items bought from a source that does not charge state tax at point of sale. FYI !!!!
Posted by (7 comments )
Reply Link Flag
Internet Sales Tax
What are the guidelines for Internet tax. My corporation is based in NC, and I am currently not charging tax for all states except NC. Do I have to charge a sales tax for NC?
Posted by snappy44 (2 comments )
Link Flag
Sales tax
MN has a "USETAX", on line, mail order, most any purchases in excess of $770 per year MUST be declared and filed with tax payment of 6.5% plus any add-on fractions for certain localities for items bought from a source that does not charge state tax at point of sale. FYI !!!!
Posted by (7 comments )
Reply Link Flag
Internet Sales Tax
What are the guidelines for Internet tax. My corporation is based in NC, and I am currently not charging tax for all states except NC. Do I have to charge a sales tax for NC?
Posted by snappy44 (2 comments )
Link Flag
 

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