Fact Check: Amazon to “Collect” Sales Tax in All US States

Fact Check: Amazon to "Collect" Sales Tax in All US States Amazon Retail Taxes Earlier this week the American Bookseller Association celebrated a victory which wasn't nearly as impressive as they made it sound.

The ABA would have you believe that Amazon is soon going to be collecting sales tax in all states which have a sales tax, but that's not actually what is going to happen:

After almost two decades of a hard-fought political battle to require Amazon to collect and remit sales tax in every state that collects sales tax, Main Street retailers can finally declare victory.

Come April 1, Amazon will be collecting and remitting sales tax in all 45 states that collect and remit sales tax. That number was reached when Hawaii, Maine, and Idaho recently announced deals with Amazon.

“It is safe to say that the arguments that we have been making — about fairness and equity — have finally won out,” said American Booksellers Association CEO Oren Teicher, who pointed to the early and continued leadership of independent booksellers in support of e-fairness as one of the key reasons why Amazon is now collecting in all 45 states. “The campaign for e-fairness was a long one — longer than we expected — but now that Amazon collects in every state that has sales tax laws on the books, independent booksellers everywhere can take great pride in a remarkable accomplishment.”

The problem with describing this as "collecting sales tax in all states" is that while Amazon is collecting some taxes on all states but it is not collecting a tax on all transactions.

Instead, it would be more accurate to say that Amazon is collecting sales tax only where it is required to do so.

That distinction is important because there are many types of online transactions where the buyer is supposed to pay a use tax which Amazon is not collecting because there is no law requiring it to do so.

For example, Amazon is not collecting a sales tax on any transaction with a third-party seller. Even though Amazon is processing the payment, shipping the item, and guaranteeing the sale, the retailer is not collecting tax on the sale.

That covers more transactions that you might expect; I checked my Amazon history and was surprised to learn that Amazon hasn't sold me anything in the past year (aside from ebooks - which some states still exempt digital content from sales tax).

Instead, Amazon merely processed transactions on behalf of third-party sellers.

So why does this matter?

The ABA has made a big deal about sales tax fairness. They have framed this as a victory for "e-fairness" in that Amazon is finally collecting sales tax everywhere it is supposed to.

Technically that is true, but in practice it is mostly false.

Amazon hasn't stopped trying to avoid collecting sales tax; they have simply changed their tactics in ways that give opponents a symbolic victory while still helping Amazon's bottom line.

Amazon still has a tax advantage over brick-and-mortar retailers, so anyone who has been fighting Amazon on this issue needs to keep fighting.

image by luckypines

About Nate Hoffelder (9946 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

15 Comments on Fact Check: Amazon to “Collect” Sales Tax in All US States

  1. This was a problem only in the US. Amazon collected the appropriate taxes in Canada, Europe, Australia but not in the US because outside the US, the rate is by country or state/province so it was easy to get and update the informstion. Only the US has locality, city or county specific sales tax. So what could be just 50 rates to update instead becomes hundreds of rates to obtain and update with the possibility of new ones coming on board. I dislike Amazon intensely but I nonetheless sympathize with them on this issue.

    • There was a different tax problem in Europe. Amazon (and a bunch of other retailers) organized their operations in Luxembourg so they could charge a minimal VAT. That only ended when the tax laws changed.

  2. William D. O'Neil // 25 March, 2017 at 12:20 am // Reply

    Amazon has no legal authority to collect sales taxes except as specifically provided by law. It cannot simply decide that it wants to collect them.

    Is there any real evidence that Amazon has refused to collect them when so required by law, or that it has made real efforts to block or subvert tax laws? If not, it’s irresponsible to try to tag them as tax evaders.

  3. I agree with above poster, you can’t simply start collecting sales tax from customers if there is no law in a particular state to do so. How is Amazon getting away with this illegal behavior?

  4. Yes they are. I just went in to look at buying something I bought same time last year. Not only was the price higher, $111 last year, $137 this year, they show $11 something sales tax. I’ll just get the item from Walmart, it’ll probably be cheaper, it’ll be immediate, and same sales tax. I’m prime so shipping isn’t factor. Amazon will be hurting for sure. I’m going to tell them all the items I’ve purchased locally from others instead of them because of this illegal move on their part.

    • I hadn’t paid sales tax because Amazon had connected me with 3rd-party sellers whenever I wanted to buy something. Now we know for sure that Amazon is still collecting sales tax when they can’t avoid it.

      That’s an interesting datum. Thank you.

  5. Amazon may be collecting taxes but there may still not be taxable items in your Amazon order: https://saverocity.com/milewriter/2016/12/26/avoid-paying-sales-tax-amazon/

    Amazon itself (and Mr. Bezos) believe in low corporate taxes for themselves and have actively sought the lowest possible tax rates:
    http://www.newsweek.com/2016/07/22/amazon-jeff-bezos-taxes-479814.html

    Nor is Amazon alone: https://www.nytimes.com/2016/10/18/opinion/the-big-companies-that-avoid-taxes.html?_r=0

  6. I just checked the item in my cart and the tax shown right before the step of pressing the last button to complete the order and they are charging not just state sales tax as the press had stated they would start doing last month, but also county and City tax. The numbers work out exactly to 8.35% which is city, county, and state. They aren’t supposed to be charging anymore than state 4.225%. And they shouldn’t even be charging that.

    I called and 2 people at Amazon don’t have a clue what is going on with sales tax.

    I can go 2 miles away to Walmart and pay less sales tax than Amazon is charging me, since that is not in the city I live in. What BS.

    All this so Amazon can get their 2% kickback.

    All the articles I’ve read and all the retarded Facebook posts that say they only charging state tax rate, I’ve got screenshot showing otherwise.

  7. Nope, nothing in the state at all for Amazon. In fact many articles in print said they would only collect state. Many other people are also reporting full taxes being taken, state, county and City, so 8-10% depending on location. No replies from Amazon, 2 people on call didn’t have a clue what tax rate is. I just placed order on jet.com, 15%off, free ship, and only 4.225% state tax rate.

    I prefer Amazon, pay for prime, but if they aren’t going to compete then I’ll go local or jet or eBay.

    But right now in Missouri there appears to be confusion.

2 Trackbacks & Pingbacks

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