The days of tax free shopping on Amazon.com have come to an end for U.S. shoppers. The leading internet retailer started collecting sales tax in Iowa, Louisiana, Nebraska and Utah on January 1, 2017 then subsequently began collecting tax in Mississippi, Missouri, Rhode Island, South Dakota and Vermont on February 1st, then in Arkansas, Oklahoma and Wyoming on March 1st. Now Amazon has announced that will start collecting sales tax in Hawaii, Idaho, Maine and New Mexico on April 1st. At the start of this decade, Amazon.com collected sales tax in just 5 states, accounting for only about one-tenth of the U.S. population. However, the exponential growth of online shopping forced Amazon to expand its physical footprint and build fulfillment centers and other facilities across the country to expedite the delivery of its products.
The sales tax collected by Amazon.com is limited to just those sales made directly by Amazon and its subsidiaries. Amazon will calculate “sale tax due” for sales by third-party Marketplace sellers, however, they will not collect or remit taxes on their behalf. It is at the discretion of the third-party seller, whether they choose to collect tax or not.
For more information, check out this post on Tax Justice Blog for a time-lapse map illustrating the evolution of Amazon’s sales tax collection practices over the years.
* Alaska, Delaware, Montana, New Hampshire and Oregon do not impose state sales taxes.
If you have any questions about this or other SALT issues, please email Tom Mazurek at tmazurek@tsacpa.com. For additional State and Local Tax insights and resources, or to subscribe to our quarterly newsletter, visit tsacpa.com.
