Amazon Agrees To Collect Sales Tax In Nevada

The number of states where Amazon shoppers aren’t charged sales tax continues to shrink, as the massive online retailer has agreed to begin collecting the tax on sales to Nevada customers starting in 2014.

Reports claim that Nevada expects an influx of at least $16 million/year in tax revenue that had previously gone uncollected — even though consumers are supposed to pay that tax themselves (except in those states that do not levy a tax on retail sales).

The agreement with Nevada allows that tax collection may actually begin earlier than 2014 if the U.S. Congress ever gets around to passing legislation intended to close the loophole that has allowed retailers without bricks-and-mortar outlets to avoid collecting sales taxes.

“We strongly support federal legislation permitting interstate sales tax collection because it is the only way to level the playing field for all sellers, the only way for Nevada to obtain all the sales tax revenue that is already owed, and the only way to fully protect states’ rights,” said Amazon vice president of global public policy Paul Misener.

Amazon Agrees to Begin Collecting Sales Taxes in Nevada [WSJ.com]

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  1. eldergias says:

    Even if my state ends up collecting Amazon sales tax, I will still use amazon because A) their prices are typically lower B) I get free shipping most of the time and C) it is a one stop shop for most of my purchases (especially for holidays).

    • Bsamm09 says:

      They don’t collect from my state but they send me an email with my purchases throughout the year. I then pay use tax on it. It’s never much but I’m a CPA and one of the things that can get your license revoked is knowingly filing a false tax return.

      I doubt that I would lose it over something like that but it’s not worth it over $18. If Amazon has the info to prepare the email readily available, they could produce it when subpoenaed. Doubt the state would target me but then again it’s only $18.

      • eldergias says:

        Do you get that email automatically or did you choose a setting to get it? I get a confirmation email from every purchase, but I don’t get any email that summarizes my purchases for the year or quarter. I am going into a profession where I need to be 100% above board on everything I do or risk losing my license, so it would be good to get into taking my Amazon purchases into account.

        • Bsamm09 says:

          They just sent it to me. Saw a lot of clients with it too. Here it is in part:

          “As you may or may not be aware Amazon.com LLC is not required to collect sales or use taxes in all states, including the state of South Carolina.

          The South Carolina Department of Revenue requires us to provide the following notice to you:

          You may owe South Carolina use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the previous calendar year…

          …While Amazon.com LLC does not report this information directly to the state of South Carolina we are required to provide this information to you based on South Carolina law Section 12-36-2691(E)(3).

          As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.”

          • Bsamm09 says:

            They list my total purchases in the break. I didn’t want to let everyone know how much I spent on crap in 2011.

    • Bsamm09 says:

      I don’t know why I went off on a tangent on your comment when I should have made the first sentence be one that says I agree with all of you points.

  2. Important Business Man (Formerly Will Print T-shirts For Food) says:

    My bank gives me 2% cash back on all Amazon purchases. :-P
    #winning

    • Captain Walker says:

      And you’ll pay 5-8% (or more) in sales tax, so . . . . #????

      • dwtomek says:

        He will still be saving over best buy. My state has zero sales tax… Best buy is still rarely competitive. The only time best buy stands a chance is when they run ridiculous sales, which is to say rarely.

    • NeverLetMeDown says:

      I get 6.65% back (if I use the points for airline tickets, 5% back if I just get cash).

  3. Blueskylaw says:

    I am getting a sense of how people felt in the late
    1800′s when the Wild West was coming to an end.

  4. Torchwood says:

    Have you noticed that the states that are going after mail order retailers for sales tax are the same states that are in deep fiscal trouble? California, Nevada, Illinois, and New York come to mind. I wonder why….

    • plasmatop says:

      Tax more, not spend less. Duh.

    • Happy Tinfoil Cat says:

      Which states are not in financial trouble?

      • damicatz says:

        Theft is theft no matter what way you put it.

      • cyberpenguin says:

        New Mexico has one of the largest poverty levels in the U.S. but our state government has a budget surplus this year.

      • AustinTXProgrammer says:

        My state pushed through dramatic spending cuts but has kept a balanced budget. And the local economy is growing despite the cuts.

        Never mind, who am I kidding. Even with the so called balanced budget they are doing maintenance with road bonds.. We are spiraling into debt and won’t even admit it.

    • pot_roast says:

      Of course. Those states are desperately trying to cash in on whatever they can.

      And they only expect this to collect maybe $16,000,000? I bet they’ve wasted more on useless projects.

  5. sirwired says:

    I’m shocked they weren’t already collecting sales tax in Nevada. They’ve had a warehouse in Fernley for well over a decade, I think.

    • YouDidWhatNow? says:

      …that’s what I was wondering…whether or not they had a physical presence in NV.

      At least this article correctly recognizes that individuals are *supposed* to be paying use taxes on stuff they don’t pay sales tax on already…

      Ultimately this has nothing to do with “leveling the playing field” for all retailers – Amazon et al will always be cheaper, more convenient, provide better selection, and provide better customer service than a B&M. Whether or not you are paying a tax at the POS is utterly irrelevant from the standpoint of deciding whether to buy something locally or online.

    • jimbo831 says:

      Amazon gets around this in a ridiculous way. Most likely, that warehouse is owned/operated not by Amazon the company, but a wholly owned subsidiary of Amazon. Now they can say that the warehouse is not theirs but a different company and avoid sales tax. This works in some states but not all. They also have a warehouse here in PA (most of the things I order get to me in 1 day because they ship from it) but I am not charged tax. I know PA is also making a push to force them to start charging it and enforcing the fact that they use that warehouse.

  6. Extended-Warranty says:

    Hopefully this loophole gets closed nationally a lot sooner.

    • visual77 says:

      You realize this ‘loophole’ goes back to the old catalog days, right? The reason retailers only have to collect sales tax in areas where they have a physical presence is due to the complicated tax codes throughout the nation. Tax codes vary by state, county and city, along with the type of goods sold (compare taxes on unprepared food, prepared food, electronics, alcohol and cigarettes).

      So the compromise was to only charge catalog companies (like the old Sears and Roebuck) sales tax in locations where they maintained a physical presence.

      Imagine a small online retailer trying to keep track of tax codes for the 50 states, 3,000 counties and 18,000 cities in the US alone. It would be a logistical nightmare.

      This isn’t a “loophole”, and it certainly isn’t a new one being exploited by online retailers. It’s a way to allow retailers to exist on a nationwide basis without being ruined by sheer logistics.

      • Extended-Warranty says:

        Thank you for the 1994 update. You should work PR for a big online store.

        Why does this topic suddenly make everyone forget that technology runs everything? There is a thing that has since been perfected called databases. There are databases that are way more complicated than the tax code. You know what is more complicated than calculating all of the tax codes? Ensuring every American paid the proper use tax

        The government could very well make a central database (which they should). If online stores have to purchase 3rd party software for this, then so be it. Chalk it up as a cost of doing business. It’s no wonder why our economy is in such shambles when any idiot can open a business with no regulations, AND not collect taxes.

        So yes, this “loophole” needs to close. There was never a law intended to evade sales taxes because you purchased it online. That is essentially what is going on right now. To deny any of this makes you completely oblivious to the issue.

        • ajaxd says:

          It is far more complicated than creating a database with rates (which are available). Tax laws can be passed by every city, county and state and can be complicated (like shoes are taxed but hats are not if they are under $50). Each online retailer has to build their store to handle sales (items that were taxable before promotional coupon can be either taxed or not), refunds, partial refunds, etc…

          The system was set up so that every tax authority could get their hands into the sales tax cookie jar and it worked for years until it backfired when internet shopping became popular.

        • rmorin says:

          You have not the faintest idea of what you are talking about.

          There are these crazy things call “states” in this country and they have different laws. I live in Massachusetts, if I buy something in Store X across the border in sale-tax free New Hampshire, you believe that:

          #1 Store X should BE REQUIRED to know my state of residence or not service me
          #2 Store X should keep track of how much myself and others from MA spent
          #3 Store X should then send a check to MA, even though the store is in another state

          See that is blatantly stupid and against the constitution. Amazon does not get away with anything because they “are online”, instead are not collecting tax because they are not found to have a “presence” in certain states. A “presence” could be a warehouse, (so collecting in Nevada may be legit) could be a call center, could be a bunch of things, but it is NOT simply because you are doing business with people from another state. For you to say this should be instituted across the country shows you know not a thing about the constitution.

    • alexwade says:

      Obeying the US Constitution is not a loophole. Since internet sales are across state lines, federal interstate commerce laws take over. Plus, the laws of one state only apply within that state. Nevada has no power to enforce their laws in California or any other state. Taxes are part of the law. If a state made a law to tax internet companies who have no presence of any kind in the state, that company can tell that state to go pound sand and the state can do nothing. They have no power to block the website and they also have no power to block the packages from entering the state.

      There is no loophole. There is the law. This is confirmed in Quill Corp v. North Dakota. Legally we are supposed to pay a use tax, but the business which is outside of the state has no obligation to collect the sales tax. States want internet businesses to collect sales tax because they know it will be a paperwork nightmare and cause a huge uproar if they start enforcing the use tax laws. Until Congress creates a law managing interstate sales tax, businesses won’t have to collect sales tax if the business has no presence of any kind in the state.

  7. Cat says:

    “We strongly support federal legislation permitting interstate sales tax collection because it is the only way to level the playing field for all sellers, the only way for Nevada to obtain all the sales tax revenue that is already owed, and the only way to fully protect states’ rights,”

    Translation:

    “We have a competitive advantage over smaller online retailers if all online retailers are forced to collect state sales tax.”

  8. Dano says:

    I’ll stop shopping Amazon if they start collecting taxes in Texas. There are other places to shop.

    • lvdave says:

      Ditto.. I live in Nevada, and as much as I like Amazon, when they start charging sales tax, I’m outta there…

  9. josephbloseph says:

    Once again, it was never the 3-5% sales tax, it was the 30-50% off list price that has me buying from amazon.

    • Geekybiker says:

      Yup. Even with tax and shipping its generally cheaper online than local. Plus I don’t have to waste time driving to a store than may not even have the item in stock. Then there is the cost of gas to the store, and the comparative lack of selection in a physical store. Just about the only thing I feel the need to purchase in person are clothes.

    • CommonSense(‡≤†_‡≤†) says:

      Amazons prices are not always the cheapest.
      I always shop around, but charging sales tax definately will hurt their sales as it could make them more expensive than other retailers.

  10. Bugley says:

    Less brick-n-mortar shopping, more online shopping. And folks expected states to sit and watch critical sales tax revenue dwindle?

    No surprise, though, that laws and lawmakers are slow to bring online sales tax in line with B&M sales tax.

  11. TheMansfieldMauler says:

    …close the loophole…

    It’s not a “loophole”. It simply isn’t a federally-mandated requirement. This supposed loophole only saves the company money by cutting its expenses in having to collect, account for, and submit paperwork for the tax collection.

    Pretty soon there won’t be any “loopholes” left. Everything will be either federally mandated or federally prohibited.

    • sirwired says:

      In Amazon’s case, it’s a loophole. Companies with a physical presence in a state are supposed to collect sales tax. Amazon, who most certainly DOES have a physical presence in Nevada, has avoided tax for years through some complicated legal tricks; they also do this in some other states where they have distribution centers.

  12. icerabbit says:

    I could see Amazon losing a fair number of sales, because in many cases there are other big online retailers that have equally good prices with free or nominal shipping and in some cases you can just go ahead and by the product locally and have it instantly.

    Amazon doesn’t auto-magically have the best price. Sometimes they’re quite a ways off, and n% sales tax on top of it may make more people look elsewhere.

  13. Happy Tinfoil Cat says:

    It’s ironic that Nevada was one of the states you could mail-order stuff from knowing they didn’t charge a sales tax. Other states didn’t like that. Of course, we’re talking about a state that allows drugs, gambling and prostitution.

    California’s inventory tax has caused many if not most large retailers to store their inventory in Nevada. I wonder when Nevada will try to milk this tax and lose those jobs.

  14. momtimestwo says:

    I got this email from Amazon on Friday:

    Thank you for being a loyal customer of Amazon.com LLC. We appreciate your business and look forward to continuing to provide you vast selection, low prices, fast delivery and convenience.

    As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee. However, the state of Tennessee requires us to provide the following notice to you:

    You may owe use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the calendar year unless an exemption exists under state law or you have already paid the tax. A sale is not exempt under state law because it is made through the Internet. The total sales price of purchases you had shipped to Tennessee in 2011 was $619.21. This is the amount that you may include on your Tennessee use tax return to calculate the appropriate use tax owed unless you have already paid the tax.
    Use Tax Page: https://apps.tn.gov/usetax Please note the following:

    • While Amazon.com LLC does not report this information directly to the state of Tennessee we are required to provide this information to you based on Tennessee Code T.C.A. § 67-6-5 (f)(3) signed into law March 23, 2012.
    • This notification has been sent to all customers that had purchases delivered to Tennessee. If you are not a resident of Tennessee, the most common reason for receiving this notification is that you may have sent a gift to a recipient in the state.

    • dpeters11 says:

      I got that too (probably something I shipped to my parents house.) What I thought interesting was that it came after the tax deadline. Wouldn’t it have been more helpful to have it in time to do the taxes?

  15. FrankM says:

    The whole “level the playing field for all sellers” line is complete BS.

    It’s not my fault that “Bob’s Sundry Hut” in Tuscaloosa has not embraced the 21st century and learned to market themselves outside the state of Alabama, thus having the same competitive advantage to buyers in those states.

    Sure, then retail becomes one big round-robin. But it’s not like people want to be taxed. They want the government to spend the money they have already collected wisely.

  16. SeattleSeven says:

    Okay everyone! Are you ready for the big secret?

    When you find the item you want on Amazon, Below the price and the big green IN STOCK! text there is that little link that says “34 New from $2.99″ or whatever. Once you click on that, you’ll be in the magical world of amazon merchants. In the world of amazon merchants you’ll find lists and lists of people who sell you the item you want, for the same price or less than amazon does and they are not based in your state, so they don’t charge you sales tax.

    As an added bonus most provide “Fulfillment by Amazon” which means you still get amazon prime or super saver shipping or whatever. It is just like buying from Amazon but sales tax free!

    You’re welcome.

    • Bsamm09 says:

      It’s not sales tax free. You still owe the tax. They just don’t collect it.

      • SeattleSeven says:

        It is use tax and no one ever pays it, ever, for anything, ever.

        For the purposes of this thread and conversation on sales tax charges, these transactions are sales tax free.

        • NeverLetMeDown says:

          No, they’re not. That’s like saying “get a car for free,” when what you mean involves a .38 and a balaclava. Just because it’s an easy way to evade (not avoid, evade) taxes doesn’t make it any more legal or legitimate.

          • SeattleSeven says:

            You are equating felony theft with a tax that no one in my state pays and that the state makes no effort to collect?

        • Bsamm09 says:

          Use tax is due when sales tax is not collected and I and many of my clients pay it. Very wealthy clients pay it because they are under heavy scrutiny and have assets that travel interstate like boats.

          You are correct though, technically. But if you paid $50 in sales tax for an in-state purchase from a B&M or owe $50 in use tax on amazon purchase, the difference is in words alone.

          Would you be less upset if someone had sex with your SO rather than fucked them? They are totally different things since they’re different words with the same net effect.

  17. golddog says:

    Colorado’s “Amazon Tax”, which had already been temporarily blocked, was declared unconstitutional a couple weeks ago in federal court. Retailers in other states should take note.

    The basis was the ‘negative commerce clause’ which basically says that since Congress is vested with the power to regulate commerce between states, it denies states that power. I haven’t heard if Colorado is going to challenge the ruling and kick it up higher.

    If there’s going to be an Internet sales tax, Congress should nut up and pass it themselves.

    • daveinva says:

      “If there’s going to be an Internet sales tax, Congress should nut up and pass it themselves.”

      This. Internet commerce is the very definition of interstate commerce, and thus should be regulated– and, if necessary, taxed– at the federal level. *Solely* so.

      They should outlaw state taxes on internet sales, then pass a federal sales tax– and dedicate all those proceeds exclusive to federal debt reduction in perpetuity, or the disappearance of the debt, whichever comes first ;-).

  18. Dagny Taggart says:

    This might have something to do with the fact that Amazon owns Zappo’s, which is headquartered in Las Vegas.

  19. CommonSense(ಠ_ಠ) says:

    This is BS. The internet is not any state, nor is it even the USA. There should be no reason to collect taxes on internet purchases.
    This is government overreaching their jurisdiction.

    • CommonSense(‡≤†_‡≤†) says:

      Also to add to this overreaching of power.
      I bought an HP laptop online and they forced me to pay sales tax from HP.com.
      Then when I received my laptop it was shipped direct from China.

      I cannot understand why I had to pay sales tax on an item from china bought online.
      Lucky for us there will always be sites online not charging sales tax no matter what the laws say.

    • Matthew PK says:

      Ahhh but Amazon *is* in a state.
      They have a physical presence in Nevada, buildings, distributions centers… a lot.

      Our governor (while I think he’s wrong on the national issue of sales tax) decided to cut a deal rather than have a long and expensive legal battle.

  20. teqjack says:

    I hope this agreement is the same as Amazon entered elsewhere: that Amazon would do it as long as the State agreed to not require companies with sales of less than $500k per year to do so.

  21. Matthew PK says:

    Keep in mind that Amazon is actually incorporated in Nevada and has a significant physical presence here.

  22. DragonThermo says:

    It is a shame that the poor residents of Nevada have decided that they should be double-taxed. Not only are they paying (implicitly or explicity) for shipping, which includes income taxes for employees and fuel taxes for the aircraft and trucks, but they want to pay another level of taxes. I can’t imagine anyone, other than that senile old man in Omaha, complaining that they are not being overtaxed enough. Maybe Harry Reid tricked them into thinking that only the evil 1% buy stuff from Amazon and the evil 1% need to pay their “fair share”?

  23. NikonGal says:

    I live in Washington state where they do have a physical presence. I’ve been paying sales tax when shopping at Amazon since day 1. I’ve always envied folks who didn’t have to pay sales tax on purchases. Guess that’s now changing.