I just read that Amazon, which has a distribution center in north Texas, will begin charging sales tax on purchases by Texas residents beginning July 1, 2012. ( Texas, Amazon agree on sales taxes, says statement from Combs' office | Texas Politics | a Chron.com blog ) Amazon isn't always the least expensive option, but with their "free" shipping, their prices often are hard to beat, especially for heavier, more expensive items. Even if shipping cost is broken out from the price, Texas still collects sales tax on the total cost, and shipping/handling/postage on an item also is taxed ( FAQ: Texas Sales Tax ) So, fellow Texans plan ahead; we have two more months.
Amazon and Texas Sales Tax
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Andrew_K99
Member
I recall hearing something that all mail order type stores (like Amazon) will soon have to start charging local sales tax (applicable to the buyer) sometime in the near future. The local governments weren't happy that they were loosing money as so many people shop online.
AK
AK
eupher58
Member
Illinois amazon tax was ruled unconstitutional by a crook errr Cook county judge yesterday
seamus7227
Member
jd99
Member
Here is one article on it.
Cook County judge says 'Amazon-tax law' unconstitutional - Chicago Tribune
Cook County judge says 'Amazon-tax law' unconstitutional - Chicago Tribune
Haynie
Member
Arizona says the same thing. SInce Amazon has a distribution center here they have to pay taxes so they billed Amazon 53 million for back taxes. Amazon says no way, if you try it we will close up and put people out of work. Sounds like a stalemate here for right now.
As a business owner who has to charge sales tax I am all for them paying too.
As a business owner who has to charge sales tax I am all for them paying too.
From a national standpoint, a state can collect sales tax only if the merchant has an actual, continuing presence of some sort within that state (as I understand it). This is a local Texas battle that has been festering for a while. Texas claimed Amazon owed the state many millions in past uncollected sales tax, because Amazon established a legal "presence" in Texas when Amazon opened its Texas distribution center. Amazon countered that their distribution center was merely a regional shipping point that had only a geographic, not a legal business presence that triggered a right for Texas to collect sales tax. And, while Gov. Perry was a presidential hopeful, Amazon also threatened to close the distribution center, thus putting a couple thousand Texans out of work if Texas did not relent. It appears to me that Amazon blinked, and a deal was struck where all or a portion of uncollected past sales tax likely was forgiven.
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I heard a while ago that all online business will have to start charging tax on ALL sales, in state, out of state, international.... ALL sales. The big box stores say they can't compete with 'virtual' stores and want an even playing field.
WWAtty
Member
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The Colorado State Supreme Court did the same thing there.
Colorado Loses Internet Sales Tax Battle | TaxRates.com
Constitutional conflicts in the legislation (Commerce Clause).
It'll be interesting to see how this Internet tax collection issue is going to be resolved.
The Penguin
Member
I think you're incorrect. at least partially.
it is my understanding that if we order something on-line and it is shipped from out of state - we don't pay Texas sales tax to that merchant (obviously)
BUT (there's always a but, isn't there?)
as good tax-paying citizens - we are supposed to pay the great state of Texas directly the sales taxes on that item if we would have purchased it in state.
Haynie
Member
Sales tax has gotten pretty muddy since the great wall street unpleasantness.
I, as a business purchase an item from Utah for resale. Utah requires the person I buy it from to collect tax from me. My business is in Arizona and Arizona requires that I collect sales tax on that same item when my customer pays me for it. When we took this business over May 2008 If I bought something for resale no matter where from, there was no tax until that item left my place of business with a non-reselling customer. Big changes in four years. Very confusing.
This is why I have an accountant.
I, as a business purchase an item from Utah for resale. Utah requires the person I buy it from to collect tax from me. My business is in Arizona and Arizona requires that I collect sales tax on that same item when my customer pays me for it. When we took this business over May 2008 If I bought something for resale no matter where from, there was no tax until that item left my place of business with a non-reselling customer. Big changes in four years. Very confusing.
This is why I have an accountant.
commercialbuilder
Member
Tennessee
Amazon is building two distribution centers just outside of Nashville and TN worked out a deal with them to start colecting sales tax in 2014 I think. Here is the emai they sent.
Thank you for being a loyal customer of Amazon.com LLC. We appreciate your business and look forward to continuing to provide you vast selection, low prices, fast delivery and convenience.
As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee. However, the state of Tennessee requires us to provide the following notice to you:
You may owe use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the calendar year unless an exemption exists under state law or you have already paid the tax. A sale is not exempt under state law because it is made through the Internet. The total sales price of purchases you had shipped to Tennessee in 2011 was $177.84. This is the amount that you may include on your Tennessee use tax return to calculate the appropriate use tax owed unless you have already paid the tax.
As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.
Amazon is building two distribution centers just outside of Nashville and TN worked out a deal with them to start colecting sales tax in 2014 I think. Here is the emai they sent.
Thank you for being a loyal customer of Amazon.com LLC. We appreciate your business and look forward to continuing to provide you vast selection, low prices, fast delivery and convenience.
As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee. However, the state of Tennessee requires us to provide the following notice to you:
You may owe use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the calendar year unless an exemption exists under state law or you have already paid the tax. A sale is not exempt under state law because it is made through the Internet. The total sales price of purchases you had shipped to Tennessee in 2011 was $177.84. This is the amount that you may include on your Tennessee use tax return to calculate the appropriate use tax owed unless you have already paid the tax.
As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.
tim self
Member
Oklahoma has a section on the state return inquiring whether you purchase on line or not. It's basically the honor system. If you do you pay a flat tax on top of your state tax. Whether those states from where we purchase receive any of it or not but I doubt it.
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JamesB
Member
I got a letter that said the same thing. Told me how much I purchased on Amazon and suggested I report it to the state when I did my taxes. Amazon is building a distribution center in South Carolina too and has a deal to not colect sales tax for a certain number of years after it's complete.
You do not charge sales tax - you are forced by the state you live in to collect them for the state. I live in Delaware which has no state sales tax so I don't have to collect them - since I do not have a physical presence in any other state I am not forced to collect them for anyone else either. I like it that way.
This has always been somewhat contencious here. Delaware with no sales tax gets a lot of visitors from Maryland and Washington DC who buy here to avoid taxes. We still get them even in the light of the on line purchases. There are still a lot of folks who like to shop.
In most cases (I think there are just 5 no sales tax states) the buyer owes the state sales tax on the items they buy. And all sales tax states force merchants to collect the tax for them and maintain special bank accounts to handle the money. But, the law was decided many years ago that states do not have the authority to make merchants in other states collect the taxes from out of state buyers.
That decided law has applied to mail order for years and also applies to internet sales as well, hence states can force only companies who have a physical presence within their borders to collect taxes for them on line.
But, if the company has a physical presence within the state, the states have the power to force the company to collect tax from residents even if the physical presence is not a selling point. A distribution point would count as a physical presence. Hence, states with Amazon distribution centers do have the authority to force Amazon to collect the tax for them.
The Illinois case mentioned is a different issue - Amazon does not have a physical presence in Illinois and the state was attempting to redefine the meaning of "physical presence". Even if the law is later upheld on appeal it probably won't work because Amazon will just do what they did anyway and drop their Illinois affilliates. As will other big on line retailers who don't already have to collect Illinois Tax.
It will someday become a big issue nationwide because I believe the only way the states can get what they want will require federal law changes. At this point I doubt there is anything like enough support to pass national legislation requiring it. It would be a cost and accounting nightmare for internet businesses.
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Do you pick up the items in Utah or have them sent to you?
I make business purchases from a company in PA, have them shipped to DE and they don't have to collect tax from me. If I picked the items up they would have to collect the PA sales tax.
The only place I ran in to a problem like you have is where I was buying in NY and buying farm use items that for my use were not taxable because of my application but for non-farm applications were taxible - I had to apply for and get a farm exemption number from the state and fill out a form every time I bought feed for the cows.