Amazon, the popular online retailer, just got slapped with a tax bill of more than $50 million from the state of Arizona. Arizona is one of a growing number of states pushing for an online sales tax.
Amazon gets hefty tax bill
According to the Seattle Times, online retail giant Amazon.com received a tax bill from the state of Arizona in November to the tune of $53 million. Arizona claims that Amazon owes back taxes on sales to Arizona residents from 2006 to 2010 that the retailer has not yet paid. Amazon was similarly given a similar tax bill by the state of Texas in 2010, according to Daily Finance. The state of Texas claimed that the state was owed $269 million in back taxes.
Currently, there isn’t a national online sales tax, and the closest thing to one is a 1992 Supreme Court decision that exempts retailers from any applicable sales taxes if they don’t have a “significant physical presence,” which would naturally apply to an online retailer that doesn’t have any brick-and-mortar stores. However, Amazon does have distribution centers all over the nation, including in Arizona, where its distribution centers total up to more than 40 million square feet of space.
More states pushing for online taxes
Currently, according to USA Today, 13 states have laws on the books specifically taxing online sales involving residents of those states. There are laws going before legislatures in 10 states which would enact similar laws, though it isn’t known how many of those laws are going to successfully pass.
According to the Washington Post, laws in North Dakota, Kansas, Kentucky, New York and Washington State already include online sales as a regular sale in the state, making them already subject to sales tax.
California’s online sales tax is taking effect by the end of the year, according to the Wall Street Journal, and Amazon has already agreed to start collecting sales tax on sales made in California.
Taxes likely coming
Buying from online merchants can often offer savings, as the price is lower and some people can buy things without having to pay any sales tax. If a person also is lucky enough to get a deal for free shipping, it can offer significant savings over buying from a traditional retailer. A person can also save on gas by shopping from home in their pajamas, or even less than that.
In the late 1990s, according to the Wall Street Journal, various laws were enacted to shelter the fledgling online retail industry from cumbersome taxes that would stifle growth. Now, the industry is booming. Online sales taxes are likely to be implemented with increasing frequency. Research firm Forrester, according to TechCrunch, estimates online retail in the U.S. will reach $279 billion by 2015.
Daily Finance: http://www.dailyfinance.com/2010/10/25/texas-bills-amazon-269-million-sales-taxes/
Wall Street Journal: http://blogs.wsj.com/law/2012/02/03/arizona-to-amazon-about-that-sales-tax/