Phony Florists Pay No Taxes

[kt4ye]

I have just sent the attached News Release to our PR associates for distribution in North Carolina.

I did this because the NC Tax authorities appear to be totally oblivious to the MILLIONS OF DOLLARS in sales tax revenue that is being lost to out of state Phony Florists each year.

I also posted this on my Flower Chat Blog.

Will it make a difference? I dunno. But I know what will be the result if I do not send it out.

Cheers!

Bill

 

[TOTO]

Nice job Bill!

You may have just uncovered the Achille's Heel in the NON LOCAL PHONY FLORIST FRAUD GAME.

Sales Tax Revenue, being lost by every state, might be the motivating factor which could put an end to their ponzi schemes.

Have you sent copies of those facts to your City and State Representatives?

New York State and our Large Cities are crying POVERTY now, especially since they overspent in all their budgets during the heydays, never thinking about a rainy day future.

 

[Pandalou]

WOW, I need to figure out who to send this letter to in California.

Good job, let's hope with the current economy the state goes after them to help fill the local coffers.

 

[mikec]

Bill, a big green dot This could have huge implications in many states. It is a duel edged sword. A huge help to states and a huge huge help to all small businesses competing with on-line companies that have been getting away with this for years.

Mike

 

[CHR]

Sharon -

The Gorvernor does not care. In vetoing AB 1282 last fall he said:

To the Members of the California State Assembly:

I am returning Assembly Bill 1282 without my signature.

This bill would make it illegal for a floral business to list or
advertise a local telephone number if the phone calls are routinely
routed to a location that is different than the geographical location
of the number advertised. It would also make it illegal to list or
advertise a business name if the name misrepresents the business'
geographical location.

In today's global economy, it is unreasonable to limit out-of-area
businesses from using local names and telephone numbers. In
virtually every aspect of the economy, consumers are accustomed to purchasing products from around the world via many methods.

Emphasis mine. The bill passed both houses of the legislature by more than 2/3 majority. I'm still sick about the veto and suspect a top Schwarzenegger donor got the ear of the governor. Otherwise, the veto makes absolutely no sense.

 

[Chezbloom]

The Resnicks are egomanical out of contral freight trains of greed.

 

[mikec]

And that's why Arnold is the Gov of the great state of Cal-E-fornia

 

[bloomz]

Why would the Resnicks do that?

It seems if they helped eliminate some of this stuff it would open the door for more tf.con orders.

But then again - they are a completely reactive vs proactive company.

Maybe they'll figure this out in another 5-10 years, after someone like FTD does it first.

but maybe not...

WtfdiK?

 

[Pandalou]

CHR,
I know he vetoed the bill. I figured that if it meant a lot of money for the state he might pay more attention to it now. More money out of the phony florist maybe they would have to raise their prices and not be so attractive to customers. I don't know, maybe it's a false hope.

Sharon

 

[kt4ye]

Why would the Resnicks do that?

It seems if they helped eliminate some of this stuff it would open the door for more tf.con orders.

But then again - they are a completely reactive vs proactive company.

Hello Bloomz

WHAT FOLLOWS IS A TUTORIAL ON THE ECONOMICS OF RUNNING A WIRE SERVICE:​

In ANY large business, the LAST THING that an owner wants is wild and inherently unpredictable (in magnitude) variations in revenue. Instead, they want stable and predictable month-to-month revenues.​

Florist revenues are inherently wild and unpredictable.​

So, any wire service that relies on commissions for most of its revenues will ALSO experience wild and unpredictable revenue variations. That is BAD.​

Wire services solve this problem by reducing their dependance on commissions and increasing their dependance on recurring revenue. They get this recurring revenue the way many other organizations (like AARP, Insurance Companies, Finance Comanies, etc.) make most of their money. They get it from member's dues, service charges, sales of auxiliary items etc.​

OK, so how do you keep and grow your wire service business? You grow your business by recruiting and maintainig ADDITIONAL MEMBERS. How do you recruit additional members? You pander to their desire for MORE ORDERS​

How do you get more orders? You get them BY ENCOURAGING THE OGs AND BY BECOMING AN OG YOURSELF! ​

How do you encourage OGs? By giving them REBATES. Who pays for the rebates? The members pay for the rebates out of their (increased) monthly dues.​

< My thanks to several Floral Chat members that PM'd me to help me understand many of the fine points of this business. >​

Is TF proactive or reactive? Think about this for just a little while and I believe the answer will become glaringly clear!​

And THAT is WTFIGO

Bill​

 

[LJVF]

Seems to me that a business only has to charge sales tax for one state. If this is the case, by requiring said business to charge tax in the non-local state in which it is advertising in, won't this cause a conflict as to which state the tax is due? In other words, is it possible to force a business to charge a customer sales tax twice for the same goods or service? Unless of course the business resides in a non-tax state such as Alaska, Delaware, Montana, New Hampshire or Oregon.

So my point being if this assumption is true, the OG will still only have to pay one sales tax whether it's their own state or the state in which they are advertising in. Either way, this will only create one more step in their bookkeeping which shouldn't deter their OG practices.

The only other option is a road that seems to have been traveled many times before in trying to pass a law in which the OG can't deceivingly advertise that it is a local florist. But as we've come to find out the chances of this happening have proven to be very difficult.

 

[goldfish]

Seems to me that a business only has to charge sales tax for one state. If this is the case, by requiring said business to charge tax in the non-local state in which it is advertising in, won't this cause a conflict as to which state the tax is due?

'Amazon Tax' Lands in New York

With the passage of the hotly debated state budget last night, New York legislators approved a bill that will require many online retailers to begin collecting sales taxes on purchases shipped to the state, even if they have no operations or employees working there.

I don't know if you are aware of this, but State of New York in April passed a bill dubbed "Amazon Tax" law. It's called "Amazon" because Amazon.com is the biggest retailer affected by this law.

In the past, online retailers such as Amazon.com had to collect sales taxes only in the states where they are physically located. Otherwise, it is up to consumers to declare goods purchased without sales tax and pay "use tax" accordingly (which, incidentally, no one does).

According to the new "Amazon Tax" provision, any Internet order that goes to a New York residence must now be charged NY sales tax.

 

[kt4ye]

Seems to me that a business only has to charge sales tax for one state. NOT TRUE. See Below... If this is the case, by requiring said business to charge tax in the non-local state in which it is advertising in, won't this cause a conflict as to which state the tax is due? In other words, is it possible to force a business to charge a customer sales tax twice for the same goods or service? NOPE They just have to keep track of what they are doing! Unless of course the business resides in a non-tax state such as Alaska, Delaware, Montana, New Hampshire or Oregon.

So my point being if this assumption is true, the OG will still only have to pay one sales tax whether it's their own state or the state in which they are advertising in. Either way, this will only create one more step in their bookkeeping which shouldn't deter their OG practices. They are not charging taxes at all right now. And that puts them at a substantial economic advantage with respect to REAL FLORISTS!.

I understand your point, but generally, that's not the way the law works. Imagine for example, that you had two shops. One in your state and one in an adjacent state. And let's assume that one of those states had NO SALES TAX or a much lower rate. Wouldn't it be tempting to channel all your orders through the low Tax Rate state?

That's one of many reasons why states have laws that define what constitutes "doing business" in a state. The "nexus." In many if not all states, the definition of doing business includes ACTIVELY advertising and promoting IN another state.

Nationwide companies are used to this.

For example, on BOTH my TF and my FTD bills, they charge me NC sales tax on product rental and/or services. Hmmm... I wonder why they charge ME sales tax but don't charge sales tax on orders originaing in NC?

The only other option is a road that seems to have been traveled many times before in trying to pass a law in which the OG can't deceivingly advertise that it is a local florist. But as we've come to find out the chances of this happening have proven to be very difficult.

Actually, 23 states have a law like that on the books. But the individual state's Attorney Generals have bigger fish to fry, and THE LAWS ARE NOT BEING ENFORCED. That's one reason why the OGs are running wild.

That's also why I sent out the PR release. My HOPE is that when the public understands how many millions their state is losing in unpaid Sales Taxes (and back taxes) they may force the Tax Authorities (not the AG's office) to go after the OG's pocketbooks!

Cheers!

Bill

 

[LJVF]

'Amazon Tax' Lands in New York


I don't know if you are aware of this, but State of New York in April passed a bill dubbed "Amazon Tax" law. It's called "Amazon" because Amazon.com is the biggest retailer affected by this law.

In the past, online retailers such as Amazon.com had to collect sales taxes only in the states where they are physically located. Otherwise, it is up to consumers to declare goods purchased without sales tax and pay "use tax" accordingly (which, incidentally, no one does).

According to the new "Amazon Tax" provision, any Internet order that goes to a New York residence must now be charged NY sales tax.

Interesting goldfish, I did not know this. However I found the following quotes from your linked article a bit confusing:

The so-called "Amazon tax" closes a loophole for Internet retailers who derive sales through affiliate programs in which Web site owners place a link to the merchant on their site and earn a commission on sales made from referrals. In lobbying for the bill, the industry group representing New York retailers had argued that the exemption from the sales-tax collection requirement gave out-of-state online retailers an unfair competitive advantage.

The law only applies to online retailers that collect at least $10,000 in annual revenue from affiliates who live in the state, but the requirement will be burdensome even for large companies, said Joe Henchman, tax counsel at the Tax Foundation, a tax-reform research group in Washington, D.C.

Does this law only pertain to sales generated from affiliate website marketing?

 

[LJVF]

I understand your point, but generally, that's not the way the law works. Imagine for example, that you had two shops. One in your state and one in an adjacent state. And let's assume that one of those states had NO SALES TAX or a much lower rate. Wouldn't it be tempting to channel all your orders through the low Tax Rate state?

Can a business be forced to pay sales tax twice for two states for the same purchase? If so then you make some very valid points.

I was under the assumption that only the online retailers that can legally sell sales tax free are the ones that operate in non-sales tax states, such as Oregon, Alaska, Montana, etc... Is my assumption wrong? I'm really not up on all the sales tax laws.

 

[kt4ye]

Can a business be forced to pay sales tax twice for two states for the same purchase? If so then you make some very valid points.

No one will be paying sales tax TWICE unless their bookeeping is REALLY screwed up. The issue is that the OGs are not charging tax at all!

I was under the assumption that only the online retailers that can legally sell sales tax free are the ones that operate in non-sales tax states, such as Oregon, Alaska, Montana, etc... Is my assumption wrong? I'm really not up on all the sales tax laws.

Your assumption is incorrect. For example, buy something from an online merchant (not an OG) that is not located in your state. Assuming that he is not shipping to you from a warehouse in your state, chances are near 100% that you won't pay sales tax. (Technically, you are supposed to -- of your own free will and sense of civic duty -- calculate and pay the sales tax to your local authorities.)

HAH!

NOW buy something from an online merchant with a physical presence in your state or shipping from a warehouse in your state. You WILL pay sales tax.

The key is (or is supposed to be) whether or not the merchant has a business presence (nexus) in the state.

I hope this helps!

Bill

 

[LJVF]

Your assumption is incorrect. For example, buy something from an online merchant (not an OG) that is not located in your state. Assuming that he is not shipping to you from a warehouse in your state, chances are near 100% that you won't pay sales tax. (Technically, you are supposed to -- of your own free will and sense of civic duty -- calculate and pay the sales tax to your local authorities.)

HAH!

NOW buy something from an online merchant with a physical presence in your state or shipping from a warehouse in your state. You WILL pay sales tax.

The key is (or is supposed to be) whether or not the merchant has a business presence (nexus) in the state.

I hope this helps!

Bill

Bill thanks for trying to clarify, it's been an interesting thread so far.

I've been charged sales tax for virtually every online purchase I've made over the last few years. These retailers would include bulbs.com, buy.com, several online auto parts stores, and many more. Am I to assume they are all located in California, the state in which I reside?

 

[CHR]

The inequities of sales tax laws (brick & mortar penalties) have been discussed here before at length. see:

http://www.flowerchat.com/forums/showthread.php?t=8718
http://www.flowerchat.com/forums/showthread.php?t=10979
http://www.flowerchat.com/forums/showthread.php?t=7596

Paul Goodman in representing the floral industry the Streamlined Sales Tax Project which is supposed to make tax collection more fair for B&M's.

Basically, the Supreme Court has said a state cannot compel a business to collect sales tax unless it has a nexus with that state. The flower business is one of the very few where sales tax is sourced at the business' location and not at the delivery location.

Back in the 1940's, florists (with the help of FTD) got laws changed in every state that collects sales tax. What was then a simplification for florists, has now become a liability and puts many of us at a competitive disadvantage. (Except shtores in Alaska, Delaware, Montana, New Hampshire and Oregon since they have no sales tax.)

CA brick and mortar florists must charge & remit sales tax on every purchase, including outgoing wires. CA OGs (SFO's) only have to charge tax on orders made by Californians AFAICT.

Just Flowers and PF went before the State Board of Equlization to have the old law changed. They did not want to be classified as 'Florists' by the State of CA.

There's more, but I really have to get some work done today...

HTH

 

[goldfish]

Does this law only pertain to sales generated from affiliate website marketing?

No, it applies to all the amazon.com orders. A bit of history helps put this New York "Amazon tax" law into context.

The Supreme Court (so-called "Quill decision" 1992) has ruled that a state can only impose sales tax-collection obligation on an out-of-state retailer IF the retailer has a "nexus" with the state.

Nexus means that a business has sufficient connection with the taxing State to allow the State to have taxing authority. This connection means that the business may have a permanent presence in the State--if it has a business location, if it has resident employees, or if it has property (tangible or intangible) in the State. Or, the connection may be that the business has temporary presence by engaging in regular and systematic solicitation of business by employees or representatives who conduct business activities in the State in order to establish and maintain its economic market in the State.

Amazon.com doesn’t have any physical presence in New York, but it has thousands of New York-based Advertising Associates members ("Affiliates"). State of New York considers the existence of these affiliates as the evidence that Amazon.com has indeed "nexus" in New York.

If Amazon.com has nexus in New York, they must collect New York sales tax - that's the logic of "Amazon tax" law.

By the way, Amazon sued the State of New York, so we don't know what will eventually happen. In the meantime, Amazon is already collecting New York sales tax.

 

[goldfish]

I've been charged sales tax for virtually every online purchase I've made over the last few years. These retailers would include bulbs.com, buy.com, several online auto parts stores, and many more. Am I to assume they are all located in California, the state in which I reside?

Since I'm bored, I checked the two web retailers you mentioned.

bulbs.com should not have charged you a sales tax. From their terms of sale...

6) Sales Tax.
You are responsible for the payment of any state and local sales or use taxes that may apply to your order. The sales tax is calculated based on the full invoice price, and may include charges for shipping and handling if required by law. By law, bulbs.com must collect sales tax for orders SHIPPED to the states of Massachusetts or Michigan.

They didn't mention California.

buy.com correctly charged you sales tax. From their FAQ...

Do I have to pay sales tax? Yes, if the Ship To address on your order is in the following states:

California
Massachusetts
Tennessee
New York

I don't know about other small online retailers. But if they ever charged you a tax, it's possible that they made not just one, but two possible errors.

First, chances are that they shouldn't have charged you a tax (no nexus in CA) in the first place. Second, the tax table they used was most likely based on the retailer's locality, rather than that based on ship-to address. In fact, calculating a sales tax based on destination would have been a nightmare to configure in any e-commerce site. There are thousands of tax codes... Hint: do you know how much sales tax you should charge in our county? Take a look here, scroll down all the way to Suffolk county.