Amazon Begins Collecting Sales Tax In Two More States

(AP) Minneapolis – today (Friday, October 3) begins collecting sales tax from purchasers in Minnesota and Maryland, marking the 22nd and 23rd states where the online retailer will tax purchases.

With the addition of Minnesota and Maryland, nearly 70% of the country is now taxed on their Amazon purchases.

This comes as a complete turn around from a few years ago, when Amazon fought to protect customers from sales tax, viewing it as a competitive advantage over brick-and-mortar rivals.

But that changed recently, as Amazon perceives itself as disadvantaged versus online rivals such as eBay and Overstock. A 1992 Supreme Court ruling allows states to apply sales tax to any retailer with operations in the state, which some states have interpreted to include partners.  While eBay and Overstock have none to very few distribution centers, Amazon has them in multiple states.  Because of that, Amazon has a physical presence in more states than its competitors, meaning more of its customers have to pay sales tax. Amazon supports federal bill that would give states more leeway to charge sales tax, evening the playing field. 

That bill, which is also strongly supported by NAED and many other trade associations, is called the Marketplace Fairness Act.  Currently tied to the Internet Tax Freedom Act, which is legislation that would also prevent the collection on taxes for Internet usage. It has not moved forward in Congress and will probably not be debated or face a vote before the end of this calendar year.

The next state where Amazon is scheduled to collect sales tax is South Carolina in 2016, part of a deal the Seattle company reached to build warehouses in the Palmetto State.

Still, other states are likely to fall under sales-tax requirements for online purchases through Amazon. The company has been building warehouses near urban centers at a frenetic pace, as it seeks to speed shipping times.

At the moment, Amazon is seeking to build a data center for its growing Web services division in Ohio. That could one day trigger sales tax for another 11.6 million Americans.

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