Amazon Faces Sales Tax Pressure

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More states are trying to force Amazon and other online retailers to charge sales taxes as a result of the recession and tighter state budgets.

Five states have introduced legislation that would affect Amazon’s sales tax collections in those states, namely California, Hawaii, New Mexico, Minnesota and Vermont. And Illinois just passed a law requiring online retailers to collect sales taxes in some cases.

states push for Amazon to collect sales taxesYou see a state can’t require a retailer to collect a sales tax unless the dealer has a physical presence in that state. The Supreme Court deemed it so in 1992, well before the online sales boom. But states are getting in the back door by requiring Amazon and other online sites to collect taxes on sales made through affiliate sites that drive traffic to Amazon or Overstock.com, etc. (if the affiliates are based in the home state).

The bigger point here is that there’s a groundswell of political will among states to force online retailers to collect sales taxes, and this may eventually compel Congress to act and change the rules.  Many believe this would level the playing field between brick and mortar stores and online retailers .

“The ideal solution would be for Congress to act or the Supreme court to revisit the matter. That’s more likely to happen if states force the issue by acting first,” said Minneapolis StarTribune columnist Eric Wieffering.

It’s a complex issue, but if you’d like to read more about it see the sources for this story below:

The StarTribune.com

ABC News

The New York Times

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8 Comments

  1. Hey Ryan and Willard,
    Too bad you are learning how the cost of doing business will affect your prices….enjoy the rope….all of you brick and mortar brethren will supply more rope if you’d like…Time for the Brick & Mortar to rejoice….any state should be ready to levy sales tax on ANY online company delivering into their state….can’t figure out how? Make the USPS, UPS and FedEx collect for them.
    There shouldn’t be any sales tax on anything….but that is an argument for a different day.
    Larry

  2. I agree.
    The internet has effected the profitability of brick and mortar business far too long.
    Level the playing field in the automotive aftermarket or business’s will not survive.

  3. I AGREE WITH DON’T MIND COLLECTING TAX FOR ONLINE SALES. BUT THE IDEA OF HAVING TO WRITE 50 CHECKS IS A BIT SUICIDAL. SURE HOPE OUR GOVERMENTS CAN WORK OUT A GENERAL CLEARING HOUSE FOR A ONE CHECK PAYMENT. COLLECTING SALES TAX ONLINE WOULD HELP OUR LOCAL SALES.

  4. Ryan,
    I just finished coiling the rope and tying the knot. I am sick and tired of you on line parasites who bring nothing to the party but price. You add no value to the sale except big discounts which at times are misleading. Brick and Mortar educates and creates demand and then has to deal with an average 9% tax burden. The unfair tax advantage that you enjoy is wrong. The sooner government figures this out the better.

  5. I don\’t mind the collection of sales tax for my online store, but the states need to level out the tax rates and have retailers send all the collected tax to one entity. The idea of writing 50 sales tax checks every month and all the associated paperwork makes me want to hang myself.

  6. Brick and mortar retailers face more than enough challenges in competing with online retailers. We should not have to cede an additional advantage in sales tax. With hard pressed state budgets there are millions of dollars per state that can be realized by making everyone pay their fair share.

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