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Amazon Tax Could Expand Nationally

January 4, 2010

More states could be proposing to levy sales taxes on and other Web retailers in an effort to collect much-needed revenues to fill their shrinking coffers.

Currently, New York is the only state levying the tax on Amazon on the basis that Amazon uses affiliate Web sites in the Empire State that steer business toward the Seattle-based e-tailer. Since New York passed the law, Amazon customers in New York have been paying the tax, as have Washington State customers and customers in three other states (Kansas, Kentucky and North Dakota) where the company has warehouses. But Amazon and are challenging the law in the New York courts.

Other states have tried to impose the tax on Amazon, according to an interesting article in the Puget Sound Business Journal. California and Hawaii were two of them. However, Hawaii Governor Linda Lingle vetoed one such bill, and California Governor Arnold Schwarzenegger said he would veto another in the Golden State. North Carolina and Rhode Island managed to pass Amazon sales tax laws, but Amazon cut off its affiliates in those states to avoid the taxes.

Now, with state tax revenues seeming to dip every month, the Amazon tax is rearing its head again, including in California, where a lawmaker wants to include the tax in the state’s seemingly endless budget negotiations. Taxpayers are supposed to declare the sales taxes on their Internet purchases every year on their federal tax forms, but very few of them do. If the Amazon tax starts passing in more states, then the company may eventually be pressured to collect the tax whenever its customers ring up their online shopping carts.

Good thing for the company and its customers that the holiday shopping season is over.

Comments (1)
It is unfortunate that Amazon has been singled out as the target here, as the uncollected tax associated with their transactions represent a small fraction of the $20 Billion or so of uncollected B2B and B2C ecommerce sales taxes annually. As much as half of this uncollected tax revenue is generated by transactions from the smallest merchants on the Internet.

Hopefully the revised Main Street Fairness Act will be soon introduced before congress to address this very issue.

The Main Street Fairness Act will finally mature efforts which have been underway for the last ten years called the Streamlined Sales and Use Tax Agreement (or SSUTA). SSUTA has been developed collectively by 44 states, along with industry groups and retailers, in an effort to simplify and modernize state-by-state sales tax codes to eliminate the overly burdensome "entanglements" cited by the US Supreme Court opinions from 1967 (Bellas Hess) and again in 1992 (Quill). Complete details about SSUTA are available at their website,

We maintain that with basic application of modern technology with SSUTA simplified rules and procedures, systems within e-commerce websites could easily calculate (and collect, and remit) accurate local destination-based sales tax, using techniques akin to real-time shipping calculation - a feature frequently a part of most modern web purchasing experiences today.

We believe it should be easy for everyone- merchants, purchasers and government, to comply with existing tax law and do the right thing for our communities.

R. David L. Campbell
Chief Executive
The Federal Tax Authority (
Posted by | Tuesday, January 05 2010 at 9:29AM ET
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