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

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

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Albertde March 23, 2017 um 5:22 pm

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.

Nate Hoffelder March 23, 2017 um 6:04 pm

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.

William D. O’Neil March 25, 2017 um 12:20 am

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.

JC March 27, 2017 um 10:50 am

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?

Nate Hoffelder March 27, 2017 um 12:55 pm

That’s the thing: Amazon isn’t collecting sales tax. This whole story is a smome screen.

JC March 27, 2017 um 2:19 pm

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.

Nate Hoffelder March 27, 2017 um 4:16 pm

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.

RW-in-DC March 27, 2017 um 4:42 pm

Amazon may be collecting taxes but there may still not be taxable items in your Amazon order:

Amazon itself (and Mr. Bezos) believe in low corporate taxes for themselves and have actively sought the lowest possible tax rates:

Nor is Amazon alone:

JC March 28, 2017 um 12:23 am

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.

Nate Hoffelder March 28, 2017 um 10:14 am

Do you have one of Amazon’s stores in your city? That could explain why they collected the full tax load.

Anne March 29, 2017 um 2:49 pm

Here’s an article that says they’re collecting the cumulative tax rate in MO:

Regardless whether Amazon is required by law to collect sales tax or not, I’d much prefer they, and every other retailer collected it rather than me having to fill out a use tax form every year. One of my favorite retailers is in Oregon (no sales tax) and I just hate filling out my state’s form even if it takes me less than 20 minutes to do it.

JC March 30, 2017 um 1:12 pm

Ok, first of all, you do have to claim use tax, may be law, but no enforcement and hasn’t been for years. So that is irrelevant discussion. I’ve read articles that state you don’t have to until after $2000 in purchases in Missouri, that may not be correct, but why is media wrong about all of this. Again use tax is irrelevant to this discussion.

Even now it is clear we are paying full tax rate in Missouri, including county and city, but what still isn’t clear is why. Why were they wrong about just state to begin with? Why does just charge me 4.225% on the $300 of items I bought this week, where Amazon charges me 8.35%? Makes a difference. Why does nobody seem to know what is going on? Reply from Amazon was that they couldn’t tell me now. What does that mean?

Why am I reading in other articles that in order for the city to get their share of this new tax they must have a vote by the voters? That makes no sense either. If the tax is being collected why would they not just get it?

"Unclear", what does the media have clear about this issue. Not a DT. It is almost April and this stuff still has not been made clear. We are talking about government tax items that should be written in black and white, not just arbitrary BS.

Amazon to start collecting state sales tax, but not local-

Amazon starts taxing sales, but local impact is unclear-

JC March 30, 2017 um 1:23 pm

Explain this one to me –

If Amazon is collecting state, county, and city? Why do those portions not automatically go to the correct location?

Why are they voting on a "Use-tax"? Are they not clear that they already will be getting the city sales tax from Amazon? Or do they have to do this to get their amount sent to them? This is a cluster.

By the time it is over, they’ll have a use-tax on top of the city sales tax from Amazon.

LaGrange plans to put 'use tax' proposal on Aug. 8 election ballot –

JC March 28, 2017 um 11:12 am

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, 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.

Nate Hoffelder March 28, 2017 um 11:58 am

Thanks for the data; this story is much more complicated than I expected.

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