Amazon and Online Sales Tax Collections

Amazon, the online retailer, came to agreements with Nevada and Texas to begin collecting sales tax in the respective states. Amazon will collect Texas sales tax effective July 1, 2012 and Nevada sales tax beginning in 2014.

The deal with Texas resulted from a $269 million assessment issued by the Texas Comptroller for uncollected sales tax. Texas claimed Amazon’s distribution facility in the state created nexus for sales tax. In exchange for Texas dropping its assessment against Amazon, the retailer has committed to creating jobs and making capital investment in the state.

Amazon will begin collecting sales tax on Nevada customer purchases on Jan. 1, 2014. The agreement with Nevada was a concession on the part of Amazon, since it is assumed that the company would likely lose a court battle with the state due to its having facilities in Nevada.

Amazon has also struck deals with a handful of other states to begin collecting sales tax. It has also supported federal legislation on sales tax collection, specifically the Marketplace Fairness Act, introduced last year. None of the bills to require collection of sales tax by internet sellers currently before Congress has much momentum, and the likelihood of such a bill being passed in an election year is low. However, Amazon’s vice president of global public policy in comments pertaining to its deals with Nevada and Texas, has expressed the company’s desire to work with legislators to pass a federal law regarding tax collection on all internet sales.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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