Amazon Begins Collecting Sales Tax From 3 More States

Amazon.com began collecting sales tax in Iowa, Louisiana, Nebraska, and Utah on January 1, 2017. Of course these states are probably thankful for that move. Many will see this as creating more fairness to small businesses already collecting and processing sales tax.

Iowa saw a decrease in sales tax from out of state sales (https://tax.iowa.gov/sites/files/idr/Fiscal%20Year%202016%20Annual%20Report.pdf, last visited 1-3-2017). This seems to go against the reports of an increase in online sales. Are sales tax dollars being lost through online retailers with no local physical presence? Probably.

In Utah, which has also reached a voluntary agreement with Amazon, the online retailer will keep 1.31 percent of sales taxes it collects from Utah customers. It is not clear whether this same deal applies in Louisiana where Amazon will also begin to collect sales tax in 2017.

Amazon currently collects sales tax in 28 states and the District of Columbia, according to the company’s website. The four additional states would bring the total to 32. While Amazon accounts for a significant number of out-of-state sales, there are still many remote retailers that aren’t required to collect sales tax. Some states are addressing this concern. Louisiana recently enacted a bill similar to a Colorado law (H.B. 1121) that requires remote retailers with more than $50,000 of in-state sales per calendar year to notify customers of their tax obligation by January 31 of each year and mandate that businesses send a report of their prior year's sales to the DOR by March 1 - Ugh.

The District of Columbia is the most recent jurisdiction in which Amazon has begun collecting sales tax, in support of a federal bill addressing the issue of taxing remote sales -- the Online Sales Simplification Act of 2016 -- released August 25 by U.S. House Judiciary Committee Chair Bob Goodlatte, R-Va.

Let's see if the trend continues with not just Amazon but other online retailers. Soon, I'm afraid, the days of tax free purchases online will be gone.