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Amazon Sales Tax Expanding

Name 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 [3], 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 [4]: Kansas, Kentucky, New York, North Dakota, Texas, and Washington. According to CNN Money [5], that number will expand in the coming years:

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 [6]” but I don’t know anyone who pays it. I don’t even know anyone who claims to pay it. 🙂

(Photo: thisisbossi [7])