More states could be proposing to levy sales taxes on Amazon.com 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 Overstock.com 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 states 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.