Victory! Amazon Will Collect and Remit Sales Tax in All States With Sales Tax Laws
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 first efforts to level the sales tax playing field began in earnest in the late 1990s with the creation of the Streamlined Sales and Use Tax Project, an effort created by state governments, with input from local governments and the private sector, to simplify and modernize sales and use tax collection and administration to make it much easier for online retailers to collect sales tax. The SSTP and sales tax fairness were something that ABA and its independent bookstore membership first began supporting as early as 1999. Since that time, and led by independent bookstores (who were soon joined by a multitude of other indie retailers and later by chain stores), bricks-and-mortar stores have been advocating to lawmakers that remote retailers needed to follow the same sales tax laws as in-state retailers.
For much of the new century, Amazon.com used its sales tax advantage to aggressively grow its sales and market share, and, along the way, the retailer vigorously fought against collecting and remitting sales tax to states. But the persistent advocacy efforts of Main Street retailers, led by indie booksellers, and growing bipartisan support at both the state and federal levels — coupled with numerous, decisive blows in the courts and Amazon's move to a rapid delivery model — brought about Amazon’s strategic reversal.
The first state to require Amazon to collect and remit sales tax was New York State in 2008. Amazon challenged the law, but the court ruled against the Internet giant, and, in turn, Amazon lost two subsequent appeals. When the U.S. Supreme Court refused to hear the case, it essentially ended Amazon’s legal challenges to the New York statute.
In December 2016, the U.S. Supreme Court refused to hear a case regarding the constitutionality of Colorado’s use tax law. The law, which was challenged by the Direct Marketing Association (DMA) in 2011, requires out-of-state retailers to collect and remit sales tax for purchases made by Colorado residents or to inform their Colorado customers that they owe use tax on the purchases they have made. The law applies to remote retailers that have gross sales of $100,000 or more in Colorado and, according to numerous media reports, to residents who purchase more than $500 in goods or services with a retailer.
Following that legal defeat, Amazon began collecting and remitting sales tax in at least 10 new states, as reported by the Portland Press Herald.
While Amazon now collects in every state, the online retailer is still trying to maintain its competitive edge over Main Street: As Amazon has opened more and more warehouses throughout the country, it has reached deals with states and communities for billions in taxpayer subsidies in exchange for the promise of jobs, according to Bloomberg BNA’s Daily Tax Report: State.
As Amazon’s warehouse presence has expanded, ABA and independent bookstores, as well as organizations such as the Advocates for Independent Business (of which ABA is a co-founding member), have advocated against states and communities providing subsidies to any remote retailer and Teicher noted the association will continue to do so. To help make its case, ABA commissioned a study from Civic Economics, Amazon and Empty Storefronts, a report indicating that in 2015 Amazon did not create jobs — indeed, it actually lost some 200,000-plus jobs nationwide.
Here’s a look at the last three states to require Amazon to collect and remit sales tax:
Hawaii: In Hawaii, Amazon confirmed that it will begin collecting and remitting sales tax on orders made by the state’s residents as of April 1, as reported by Hawaii News Now. The online retailer and state are still finalizing details of the agreement, the article noted.
Idaho: Amazon will begin collecting the state’s six percent sales tax on orders made by Idaho residents beginning April 1, as reported by the East Idaho News. “We consider this to be a matter of fairness,” Idaho Gov. Butch Otter said in a statement. “As an industry leader and one of the world’s largest retailers, Amazon’s decision will provide more tax revenue to help pay for the essential operations of state government. But just as importantly, it will help Idaho taxpayers comply with state law while creating a more level playing field for Idaho’s brick-and-mortar retailers.”
- Maine: Amazon.com will begin collecting Maine’s 5.5 percent sales tax beginning April 1, as reported by the Portland Press Herald. “Today’s decision by Amazon is welcome news to Maine retailers and consumers,” said Commissioner George Gervais of the Maine Department of Economic and Community Development. “Maine businesses can go toe-to-toe with the very best out-of-state companies, provided they are competing on an equal playing field. Amazon’s decision to collect and remit sales tax to the state of Maine is an important first step in leveling the playing field.” Additionally, the increased tax revenue may allow legislators to reduce the state income tax, Gervais said.
In related news, Utah’s state tax commission will be ordered to release some details regarding its sales tax agreement with Amazon, as reported by the Associated Press. The request for details came from libertarian group Libertas Institute. Initially, the Utah State Tax Commission denied the group’s request for a copy of the deal, which was struck in December, AP reported. However, the State Records Committee sided with Libertas, and as a result, the Tax Commission will have to release the first six pages from its agreement with Amazon, though the article notes that specific numbers will be redacted.