I almost participated in a boycott of Amazon.com. This was almost a decade ago when Amazon filed for a patent for its 1-Click ordering process. The patent was struck down in 2007 but I didn’t notice. In the face of Amazon’s low prices and, in my state, exemption from sales tax, my convictions didn’t stand a chance.

Today, Amazon is still my retailer of choice. In almost all cases, anything I could buy elsewhere costs less on Amazon if it is available. I decided last year to begin paying the annual $79 fee for Amazon Prime which provides me with free two-day shipping for almost all products and one-day shipping for $3.99.

I have also added the Amazon application to my new cell phone. Now when I’m shopping without advance preparation, I can scan the UPC bar code and view the product information, including price, specifications, and reviews, if Amazon sells the same item. Often, if the price is lower and I can wait another day or two before using the product, I opt to save money and buy from Amazon. I can do this using the formerly-avoided 1-Click ordering from my phone while I am in the store offering the same product for a higher price.

Part of the appeal is that in New Jersey, the state in which I live and the shipping destination for most of the products I buy, I do not need to pay sales tax on internet-based purchases from Amazon. Most states do not require sales tax if the company does not have a retail presence in the state. Amazon in New Jersey falls into that category. If you live in New Jersey or in 44 other states, you do not have to pay sales tax when you purchase and receive items from Amazon. New York shoppers once received the same benefit, but the state, in need of money, has at least temporarily begun requiring sales tax payments.

If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, Amazon’s practices should not matter because you would not pay sales tax regardless of whether the company has a retail presence.

Theoretically, in states that do require sales tax, you are supposed to pay a “use tax” when you file your state tax return to cover any purchases for which you did not pay sales tax to your state. This would include out-of-state purchases as well as online shopping.

This seems, like the patent filing, to be a way for Amazon to slip through the cracks of the law in order to hold an unfair advantage over competing retailers. Even Target.com, operated by Amazon, charges sales tax in most states. The two sides of the argument are succinct:

• If Amazon does not have a retail presence — physical, brick-and-mortar offices for the retail arm of the company — in any state, the law says it does not need to pay sales tax in that state.
• Even if Amazon doesn’t have a retail presence in a state, it most likely has offices for one of its many subsidiaries in that state. Those subsidiaries require public services like police and fire protection, and should therefore pay taxes to support those services.

Amazon is getting around the sales tax requirement by compartmentalizing every aspect of its business into subsidiaries. Almost all large companies do the same thing in order to benefit from the most business-friendly laws, including those pertaining to taxes.

Here is the real problem, however. Online commerce has existed for over a decade and there still hasn’t been any great progress in determining how best to govern that activity. Until there are more uniform rules, Amazon will do whatever it can to avoid paying taxes, I will shop at Amazon to avoid paying taxes (although it is often the lowest-priced competitor anyway), and out-of-state friends will continue to ship their packages directly to my address to avoid paying taxes.

Should all Amazon shoppers pay sales tax? Money being spent on purchases from Amazon is money that is not being spent in local stores. Those states with sales tax laws are losing out on income, income that is much needed in a recession and when states are having budgetary shortfalls. These shortfalls are recovered through increased income taxes, property taxes, and perhaps roadway tolls, with a larger burden on individual taxpayers. But yet, tax-exempt purchases could be keeping prices down, encouraging spending and some level of economic growth.

Do you pay taxes for your Amazon purchases? If you have never paid sales taxes for products you buy from Amazon but your state’s law changed to require you to pay sales tax, would your behavior change? I do not think the addition of a sales tax on Amazon purchases in New Jersey would be enough to encourage me to buy more products in brick-and-mortar locations. My only considerations and total price and convenience.

Note: This article was updated after it was published to remove an incorrect statement about how retailers collect and pay sales tax.
Sorry, Shoppers, but Why Can’t Amazon Collect More Tax?, Randall Stross, New York Times, December 26, 2009

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The recession has inspired a focus on saving more money among Americans, even if this focus is likely temporary, giving way to excess spending once employment returns to a sustainable level and credit becomes readily available. But for a short time, frugality has permeated the country’s consciousness. It has popped up everywhere, including technological innovation.

Yowza!!

A few months ago, Tom Dziubek and I interviewed Greg Grunberg for the Consumerism Commentary Podcast. You might know Greg as Matt Parkman on NBC’s “Heroes,” or as the driving force — and drummer — behind Band From TV. He also came up with the idea for Yowza!!, an iPhone application coordinates retail coupons with your GPS-based location to present you with deals within walking or driving distance.

To prepare for the interview, I tested Yowza!! on my girlfriend’s iPod Touch. Without access to the internet through a cellular network, relying on WiFi, we were still able to find coupons at home before leaving for a shopping trip, saving the coupon to the iPod, and using it in store. One of the drawbacks — and this might still be a drawback — is there weren’t a large number of retailers participating in the program.

When I purchased a Motorola Droid last month, I was disappointed that Yowza!! was still only available for the iPhone and iPod Touch. Droid phones have a Google-based operating system called Android. Although thousands of applications are available for devices running Android, their development is still well behind iPhone applications.

Hidden away in another application, the joy of saving money through Yowza!! is available for Android; I just didn’t know it until I read Greg Grunberg’s tweets more carefully.

Where

“Where” offers sixteen functions in one free application. It copiously uses the phone’s GPS capabilities to offer weather with a better interface than The Weather Channel’s free app, news, traffic conditions, gas prices, and a business phone book powered by yellowpages.com. The “offers” mini-app is Yowza!! without the brand name. With my Droid, I can walk into a store, display a page, and get my discount, as long as the store has established a relationship with Yowza!! for offering coupons.

Within 15 miles of my apartment, I can pull up various deals for Toys “R” Us, Babies “R” Us, Sears, Crate and Barrel, Finish Line, Sports Authority, Guitar Center, ULTA, The Container Store, Garrett Popcorn, and CB2. There are certainly more retailers listed now than there were six months ago, but it’s still a disappointing list. Where is Best Buy, Home Depot, and my local pizza place? I understand that Yowza!! is based in California, and west coasters will see more of their common retailers represented, but I envision a future where almost all coupons are available via mobile devices.

Google may have the answer.

Favorite Places on Google

Google has determined the most popular retailers in twenty of the largest cities in the United States, Google’s Favorite Places, and has sent them window decals. Like those stickers that notify customers that a store accepts Visa or MasterCard, the hand-selected (or more likely, algorithm-selected) retailers can display a notification that they have a Place Page on Google.

The decals provided by Google contain a QR code (like a bar code) that can be scanned by devices like the iPhone and the Droid. When a QR code is scanned, the mobile device will display the store’s Place Page, a website that contains information about the store including reviews and coupons. With the backing of Google and the company’s incredible reach and reputation, it could take only a short time for Favorite Places to wipe out Yowza!!.

Coupons increase spending rather than decrease spending. If you are going to buy something regardless of a deal, you can save money with these features. In general, I wouldn’t suggest looking for coupons before deciding what to buy because you are more likely to spend money you wouldn’t have spent. Regardless, Yowza!!, Where, and Google’s Favorite Places are great examples of how mobile technology, inspired by the recession, can be used to help customers.

Do you use mobile coupons?

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