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Technology

Amazon does collect sales taxes despite Trump's tweet

Amazon, the online retail giant, is collecting sales taxes nationwide on purchases. President Donald Trump seemingly took a swipe at the internet juggernaut suggesting otherwise on June 28.

As of April 1, Amazon began collecting sales taxes on purchases across the country, with the exception of states that don’t have a sales tax: Alaska, Delaware, Oregon, Montana and New Hampshire.

The National Conference of State Legislatures estimates that states lost out on $23.3 billion in revenue in 2012 due to their inability to collect sales taxes from online purchases.

How states treat sales taxes for web and catalog purchases is tied to a 1992 Supreme Court case, Quill Corp. v. North Dakota.

The court ruled that states couldn’t require retailers to collect sales taxes unless they had a physical presence in the same place where the buyer is located.

Major online retailers — namely, Amazon — more and more fall under that rule by building data centers, warehouses and other facilities in multiple locations. Prior to April 1, Amazon was collecting taxes from a majority of states.

Even if your online retailer doesn’t assess a sales tax because it doesn’t have a brick-and-mortar location in your home state, your state may require you to pay use taxes on your purchase, according to Richard C. Auxier, a research associate at the Tax Policy Center.

Use taxes, which apply to items you buy outside your state of residence, generally are assessed at the same rate as a sales tax. The burden of reporting use taxes falls to the consumer, Auxier said.

“Everyone owes taxes on online purchases, be it from Amazon or a small retailer,” he said. “The question we deal with is ‘Who collects the tax?'”

States that assess use taxes give their residents a way to report it. California, for instance, provides a worksheet for taxpayers to calculate what they owe.

New York, meanwhile, offers forms for reporting these levies when you file your income tax return. In the Empire State, you may be subject to penalties and interest on any back use taxes.

In reality, states haven’t been particularly stringent about collecting these use taxes — and many shoppers don’t even know they owe.

“Very few taxpayers report it, even when systems are in place to make use tax payments easy,” said Auxier.

As a result, a coalition of 24 states has adopted the Streamlined Sales Tax Agreement, which allows retailers to voluntarily collect taxes.

In practice, it’s easier for online merchants to add the tax at checkout, as opposed to having states pursue residents for levies owed on purchases, Auxier said.

Expect your use-tax holiday to come to an end as online retailers expand their operations into more states.

“I’m not going to look down upon or congratulate anyone, but there’s something to be said about being a good resident and paying the use tax,” said Auxier.

With respect to an “internet tax,” states and localities can’t levy taxes on access to the web.

The Internet Tax Freedom Act, which keeps states from collecting taxes on internet service, became permanent when former President Barack Obama signed a bill that included this provision into law.

Email requests for comment to Amazon and the White House were not immediately returned.

Source: Tech CNBC
Amazon does collect sales taxes despite Trump's tweet

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