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Amazon Sales Tax Expanding

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Amazon Internet sales taxName the top three reasons you shop on Amazon. Chances are one of the them has to do with sales tax because Amazon doesn’t have to collect sales tax when shipping to the majority of the states in the Union. Amazon isn’t against collecting sales tax, it just doesn’t like the added overhead of doing it piecemeal. They’re a proponent of an internet sales tax, administered at the federal level, and it’s something that I think makes sense (if you’re going to collect sales tax… which I don’t like!).

By law, Amazon collects sales tax in the states where it has a physical presence – usually offices or a distribution center. In recent years, that has extended to states in which they have an “agent” – such as New York. They’ve made some agreements with other states to delay collection in return for some concessions. It’s really a hodgepodge solution and one they probably hate.

There are only six states in which Amazon collects sales tax: Kansas, Kentucky, New York, North Dakota, Texas, and Washington. According to CNN Money, that number will expand in the coming years:

  • Sept 2012: California, Pennsylvania
  • July 2013: New Jersey
  • Sept 2013: Virginia
  • Jan 2014: Indiana, Nevada, Tennessee
  • Jan 2016: South Carolina

Here’s the funny thing about all this – technically you’re supposed to pay taxes on what you buy in what’s known as a “use tax” but I don’t know anyone who pays it. I don’t even know anyone who claims to pay it. :)

(Photo: thisisbossi)

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11 Responses to “Amazon Sales Tax Expanding”

  1. thunderthighs says:

    Some online stores I frequent already charge me sales tax, due to physical presence in my state. I must say, it is an aspect of online shopping that leaves a bad taste in my mouth.

    I shop AMZN for a lot of smaller essential and quicker purchases. If they start charging sales tax in my state, I can say with 95% certainty that I will think twice about my purchases and shop less.

  2. mannymacho says:

    I’m surprised that not all states that collect sales tax have some sort of timeline for collecting the taxes. It seems that it would be a quick win for state governments.

    • Ian S says:

      The States want to collect sales tax, but they are unable to for a few reasons. The first being that they are the ones that are responsible for collecting the tax to begin with; the store is not. To assist with the state collecting, many stores do the collecting and then get a cut to keep for themselves. Additionally, a state only has power within its own state. Ohio has no authority in California. So the State of Ohio has no influence when trying to get a store in Florida to collect Ohio sales tax (in addition to the Florida sales tax they already collect) when someone orders by phone/internet for an item to be shipped to them.

      For a far more researched explanation, look on Google and I’m sure you will find no less than 10,000 words on the subject.

  3. Shirley says:

    I am in California and I buy used paperback books on Amazon.com. Often they are priced at .25 + 3.95 shipping. Sales tax is supposed to be added to the cost of the product, so is the shipping considered to be part of the product?

    I guess we’ll find out next month. ;-)

  4. Aaron B says:

    Massachusetts ought to be on that list, for this or an upcoming year, as Amazon announced they plan to open an office in Cambridge soon.

  5. michael says:

    People really pay attention to sales tax as a reason to use or not use Amazon? I’ve never once even though of that… if they start charging me sales tax it saves me from having to report it (yes I actually report mine, i’m honest and feel it’s my duty).

    I’m all for them charging….

  6. I’ve been hearing about this and I’m really bummed! I buy everything on amazon and I always have gift cards that I get from various deals so it’s even cheaper for me, not to mention the free prime. There’s nothing like coming home to a giant box of paper towels!

  7. Anuenue says:

    I shop Amazon because other online companies charge exorbitant shipping fees to my state. Most of the time these fees exceed the price of the item/s I am buying.

  8. Scott says:

    I guess I’m the only one. My wife and I live in SC and every year when we file our taxes, we add up all the things we bought online and pay state taxes on them. It asks you right there in the form and state law says we are supposed to do it.

    Does the fact that there is no mechanism to collect that money other than personal honesty make it ok not to pay? Not in my book.

  9. christen says:

    Amazon already collects sales tax in TN. They have at least two distribution centers in the state. They actually tried to collect back taxes from residents who ordered things from Amazon while they had the distribution centers, but didn’t charge then the taxes they should have on the site. That glitch was fixed, and if you order in TN, you pay taxes.


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