Sales Tax Roundup: Amazon to Begin Collecting Sales Tax in Three More States

As the holiday shopping season was coming to a close, three states announced deals requiring Amazon to collect and remit sales tax on in-state purchases. On January 1, Amazon began collecting and remitting sales tax in Iowa, Louisiana, and Nebraska. Amazon now collects sales tax in 33 states and the District of Columbia.

Iowa

On January 1, Amazon began collecting and remitting Iowa’s six percent sales tax on purchases made by state residents. The online giant will not be collecting local sales tax, according to the Cedar Rapids Gazette. “Honestly, Amazon contacted us and agreed to do this,” Victoria Daniels, spokeswoman for the Iowa Department of Revenue, told the Gazette.

The Iowa Department of Revenue did not note how much additional Iowa sales tax revenue will be collected by Amazon with the change. “When we looked at the impact of federal legislation several years ago requiring online retailers to collect sales tax, we came up with a very conservative estimate of $18 million to $24 million,” Daniels said in the article. “We know that Amazon is a large share of that market, so it could be slightly below the $18 million mark — not an insignificant amount.”

Daniels noted that the collection of sales tax by Amazon is a matter of fairness. “Our local businesses pay property tax, employ people, and benefit from services in the community,” Daniels said. “Then you have these remote sellers who come in and take a market share away from our local businesses.”

Purchases of books on Amazon’s Kindle e-reader will remain untaxed because digital downloads are exempt from the state sales tax, Iowa Public Radio reported.

Louisiana

On December 20, the Louisiana Department of Revenue announced that Amazon would begin collecting and remitting sales tax on purchases by Louisiana residents beginning January 1, as reported by the Advocate.

Louisiana Revenue Secretary Kimberly Robinson estimates that tens of millions of dollars could be added to Louisiana’s often depleted coffers. “This isn’t going to fill the deficit, but it is going to help,” Robinson told the Advocate.

Amazon will collect both state and local taxes, according to the article, which is an average of 9.6 percent.

Jessica Elliott, director of governmental affairs for the Louisiana Retailers Association, told the Advocate that by not collecting sales taxes companies such as Amazon had a perceived price advantage over local stores. “We’re really pleased because it puts bricks-and-mortar stores on the same level as online retailers,” she said. Elliott added that Amazon’s decision to collect sales taxes came after “a couple of different bills” were passed by the Louisiana legislature earlier this year. One bill requires all remote retailers to collect sales taxes on Louisiana purchases; a second bill set notification and reporting requirements for sales made in the state by remote retailers, a law that was based on a Colorado law, according to the article.

Secretary Robinson said the Supreme Court decision to not hear a challenge to the Colorado law is likely what spurred Amazon to collect in Louisiana, and she believes it will prompt other remote retailers to do so as well.

Robert Travis Scott, president of the Public Affairs Research Council of Louisiana and a member of the Task Force on Structural Changes in Budget and Tax Policy, told the Advocate that Amazon’s dominance causes concern among local and parish (county) governments because they are seeing their sales tax collections decrease each year.

“Closing the online sales tax loophole would level the playing field for local businesses while providing much-needed funding for municipal governments,” said Karen Day White, assistant director of governmental affairs for the Louisiana Municipal Association, which represents mayors, aldermen, and city council members at the State Capitol, as reported by the Advocate. According to the Civic Economics study “Amazon and Empty Storefronts,” in 2015 alone, Amazon avoided collecting and remitting $704 million in sales taxes nationwide.

Nebraska

On December 30, Amazon announced that it would begin collecting and remitting sales tax on purchases by Nebraska residents on January 1, as reported by the Lincoln Journal-Star.

State Tax Commissioner Tony Fulton said that Amazon’s move is “exhibiting responsible corporate citizenship” and creating a chance to educate Nebraska residents about the law. “The tax is owed. So their announcement will just help Nebraskans to comply with the existing law,” Fulton told the Journal-Star.

All told, Amazon collects and remits sales tax in Alabama, Arizona, California, Colorado,  Connecticut, District of Columbia, Florida, Georgia, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.