Amazon Sales Tax Collection Goes Nationwide April 1st, No Fooling

Let's face it, one of the reasons why online shopping is so popular is because some web retailers do not collect sales tax. Technically consumers are supposed to report and pay what's called a "use tax" in those situations, but we suspect few people actually do. State governments typically focus their efforts on collecting tax from retailers anyway, and because of those efforts, Amazon is going to charge a sales tax in all states that collect a sales tax starting April 1.

This was an inevitable outcome for Amazon, which already charges sales tax in most parts of the country. It was not always that way. For the most part, online retailers have been able to avoid charging a sales tax in states where they do not have a physical presence, such as a warehouse or fulfillment center. However, as Amazon expanded the number of warehouses across the country to speed up shipping, its obligation to collect a sales tax has spread to more and more states.

Online Shopping

On top of that, state governments tallied up the lost revenue from online shopping and didn't like the numbers. It is estimated that consumers bypassed $23.3 billion in sales in 2012 from web and catalog purchases. States have been pressuring Amazon (and other online retailers) to collect a sales tax, and little by little Amazon has conceded. Come April 1, it will charge a sales tax in the remaining four states where it does not already do so—Hawaii, Idaho, Maine, and New Mexico.

For state governments, this is about bringing parity between online and brick-and-mortar retailers.

"Maine businesses can go toe-to-toe with the very best out -of-state companies, provided they are competing on an equal playing field," George Gervais, commissioner of the Maine Department of Economic and Community Development, said in a statement. "Amazon's decision to collect and remit sales tax to the state of Maine is an important first step in leveling the playing field."

The only states where Amazon will not collect a sales tax are Alaska, Delaware, Oregon, Montana, and New Hampshire, as none of them charge sales taxes on purchases (online or offline).

Via:  CNBC
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