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