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Amazon to Collect Sales Tax in Most States Starting April 1st

Mar 25, 2017

CNBC reports that after more than two decades of bad blood and legal wrangling between states and the online giant, Amazon will collect sales tax in all states that have such a levy. Collection in Hawaii, Idaho, Maine, and New Mexico, the final four states where shoppers don't pay required tax through the site, will begin on April 1st.

Amazon will still not charge sales tax in Alaska, Delaware, Oregon, Montana, or New Hampshire, which don’t have state sales taxes.

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A 1992 Supreme Court ruling decreed that online vendors can sell goods without collecting sales tax, as long as they don’t have a physical location in a given state. But as Amazon sales grew, states weighed methods for circumventing that ruling. Though most states theoretically require consumers to track and pay sales tax on purchases even if the tax isn’t collected by the vendor, that rule has gone largely unenforced, leading to billions in lost revenue for cities and states.

Amazon also enjoyed a significant competitive advantage thanks to its shoppers’ tax savings. Amazon has significantly increased the number of U.S. states where it charges sales tax in recent years, though primarily because the expansion of its network of warehouses and fulfillment centers has made it mandatory.

But the latest wave of sales tax changes appears voluntary, and began late last year when Amazon started collecting sales tax for Washington, D.C. Amazon steadily added states from December to March, with the April wave completing the standardization of company policy.

However, Amazon’s move leaves many online retailers still not charging sales tax, which brick-and-mortar retailers have long argued is a major competitive headwind. A Missouri retail lobbyist speaking to Bloomberg BNA in January said that Main Street stores still wanted a national law standardizing sales tax policy for online sellers.

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