Since their inception, online retailers have often had a major advantage over their brick-and-mortar and brick-and-click counterparts: they haven’t had to collect sales tax on items sold to customers in many states where they did not have a physical presence.
This practice has harmed two parties: retailers with stores that must collect sales tax, thereby making their prices higher than online retailers; and states that have not received sales tax revenues from purchases made online by people in those states.
After new laws and litigation, Amazon.com is one online retailer that collects sales tax in most states. As Matt O’Brien recently for the Associated Press:
“Many online shoppers in the United States have for years had to pay state sales taxes whenever they buy goods from Amazon. But the E-commerce giant has dragged its feet on collecting sales taxes in small states where it doesn’t have any distribution centers or corporate offices. That’s changing this year. Amazon customers in at least 10 more states will begin paying sales taxes on their online purchases for the first time this winter: Iowa, Louisiana, Mississippi, Missouri, Nebraska, Rhode Island, South Dakota, Utah, and Vermont. It already started this month in Louisiana, Iowa, Nebraska, Utah, and Wyoming.”
“The move follows December 2016’s U.S. Supreme Court ruling that rejected a challenge to a Colorado law requiring online sellers to notify customers about how much they owe in taxes. To avoid collecting taxes, Amazon has historically relied on another high court ruling that predates the era of online shopping. That 1992 decision bans states from forcing out-of-state retailers to collect taxes if they don’t have a physical presence in the state.”
“Excluding states that don’t have a sales tax, only 6 states remain where Amazon doesn’t collect sales taxes or hasn’t announced plans to do so. “
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