Consumers in more states are about to find themselves paying sales tax when they shop online at Amazon. Online businesses in all states may one day be required to collect sales tax from everyone anyway, but Amazon currently finds itself on both sides of the “to tax or not to tax” argument as it resists tax requirements in some states while supporting legislation that would make tax collection ubiquitous throughout the nation.
Should all online businesses be required to collect sales tax from all consumers regardless of location? Let us know what you think in the comments.
Amazon is now collecting sales tax in three new states: Indiana, Nevada and Tennessee. Now it is doing so for a total of nineteen states, which according to the Wall Street Journal, account for over half of the country’s population.
Amazon has gone out of its way to avoid this in various states. A month ago, the company was denied a chance to fight New York’s requirement for Amazon to collect sales tax from purchases made in the state. The company had sought to battle this in the U.S. Supreme Court, but the court refused to hear the case, saying that the state’s efforts are constitutional.
This followed a New York law, which took effect in 2008, which meant that Amazon had to collect taxes in the state because it sold ads through a New York-based firm.
The company has also cut ties with affiliates in other states like Minnesota and Missouri to avoid collecting tax.
In 2016, Amazon is expected to begin collecting sales tax in more states like South Carolina and Florida.
But by then, the Marketplace Fairness Act may have been passed anyway, meaning that all online retailers in the U.S. would have to collect tax from everybody regardless of whether or not they have a physical presence in a state. While you may not know it from the company’s resistance to these state taxes, Amazon is one of the biggest supporters of this bill, which passed in the Senate last year.
As our own Zach Walton explained in a recent article, it’s all about priorities for Amazon. “The Marketplace Fairness Act wouldn’t affect Amazon that much as it continues to build out more fulfillment centers in more states thus giving it a physical presence in more states. If the Marketplace Fairness Act isn’t passed, the retailer obviously doesn’t want to be stuck collecting sales taxes in states that it doesn’t have a presence in. That way Amazon can then barter with those states to collect sales tax in exchange for the state helping to build more fulfillment centers.”
And those are coming rapidly. In 2013 alone, the company announced new fulfillment centers for Connecticut, Wisconsin, California, Maryland, Florida and Texas.
As Walton noted, the situation in New York didn’t exactly cater to Amazon’s “play it safe” mentality.
Meanwhile, the Marketplace Fairness Act continues to sit in limbo as we head into the new year. House speaker John Boehner expressed his resistance to the bill last year, saying it would put “a big burden on some very small businesses,” as it would require them to comply with the sales tax codes of 50 different states. This has been a common point of conflict for those opposed to the legislation. Boehner said he would “probably not” vote to pass the bill.
Either way, it looks like Amazon shoppers in more and more states will be paying sales taxes as time goes on.
The latest states to adopt the Amazon sales tax are expected to generate $50 million in new revenue. Sales tax is 7% in Indiana and Tennessee and 6.85% in Nevada.
Should Amazon and other and other online businesses be required to collect sales tax in all states? Share your thoughts in the comments.