I was reading an article in The Seattle Times, Business / Technology section, concerning Amazon and a distribution center they built in the state of Tennessee. It seems that Amazon received free land and tax incentives from the state in order to entice Amazon to build the warehouses. When the distribution center was completed the complex employed some 1400 workers. But Amazon wanted one more condition from the state. The online retailer wanted to be exempt from collecting sales tax from the people of Tennessee who order products from Amazon.
It seems that the issue of tax collection is complicated. Amazon does collect sales tax for some states, but not for others, even though they have distribution centers in the state. There are some loop holes and Amazon seems to know the difference if their presence is by a subsidiary or by an affiliate. According to the article it stated that:
Amazon charges sales tax in a handful of states where it does business: Kansas, Kentucky, New York, North Dakota and Washington. The six states where it distributes products but does not charge sales tax are Arizona, Indiana, Nevada, Pennsylvania, Texas and Virginia.
In the most audacious move yet by a state, Texas recently hit Amazon with a $269 million bill for four years of unpaid sales taxes. Amazon, which turned around and sued Texas, demanding to see the state’s tax documents, says its warehouse near Dallas is an “affiliate, but not subsidiary, of the Amazon retailing entity.”
“More sales are taking place online, but they’re going untaxed,” said Craig Shearman, vice president of government affairs for the retail federation.
But it was this one statement that caught my eye:
Technically, Internet shoppers are supposed to report and pay for untaxed online purchases when they file their annual state returns, though few do.
Interesting. I must be uninformed, or failed to record this in my gray matter, because I don’t ever recall hearing about this. I mentioned it to my wife and she was surprised as well. We have our taxes down for us and have never been questioned about online purchases we have made and of having to pay sales tax. Now I know that ignorance of the law is no excuse, but I just wanted to see how many of you knew about this?
How do you handle paying of taxes on your online purchases?
Share your thoughts.