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Dodging sales tax is getting harder for Amazon and other online retailers

Dan Graziano
July 16th, 2012 at 7:15 PM

In the past there have been numerous advantages when ordering from online retailers like Amazon. Along with lower prices and free shipping, the majority of states do not charge sales tax on purchases unless a company has a physical location within the state. More and more states are attempting to change this, however. New Jersey Governor Chris Christie recently reached an agreement with Amazon that will see the state collect sales taxes on online purchases beginning in July 2013, The Wall Street Journal reported. The governor called the taxation of online sales “an important issue to all the nation’s governors” and he endorses federal legislation that would give all states authority to tax online retailers, a move that could revitalize traditional brick-and-mortar retailers and produce $23 billion in new annual revenue.

Democrats and Republicans alike are attempting to do just that, and are pushing a bill that gives states the authority to collect sales tax from online companies. “The handwriting is on the wall that states will collect sales taxes on online purchases,” said Sen. Lamar Alexander, a Tennessee Republican who supports the bill. “This is going to happen—if not this year, then definitely by next year.”

The news isn’t all bad for consumers, though. Amazon is believed to be in the process of rolling out same-day shipping on purchases made in states where it has distribution facilities. The retailer’s facilities are also estimated to create at least 1,500 full-time jobs, as well as “thousands” of seasonal, part-time and construction jobs. By 2014, Amazon customers will pay sales taxes in at least 13 states that account for nearly half of the U.S. population.

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