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Amazon collecting sales tax in 23 states

By Kay Bell ·
Thursday, October 2, 2014
Posted: 3 pm ET

Twenty-three. That's the number of states where Amazon now collects sales taxes.

That number ticked up on Oct. 1. On that day, shoppers in Maryland and Minnesota who bought items from the Internet retailing giant saw their overall bills increase a tad by the added taxes.

In case you're unsure of whether your Amazon purchases are subject to sales tax, here's the full state list:

States where Amazon purchases are taxed

  • Arizona
  • California
  • Connecticut
  • Florida
  • Georgia
  • Indiana
  • Kansas
  • Kentucky
  • Maryland
  • North Dakota
  • Massachusetts
  • Pennsylvania
  • Minnesota
  • Tennessee
  • Nevada
  • Texas
  • New Jersey
  • Virginia
  • New York
  • Washington
  • North Carolina
  • West Virginia
  • Wisconsin

If you live in South Carolina, mark Jan. 1, 2016 on your calendar. Amazon will start collecting taxes in the Palmetto State on that day.

Physical locations mean taxes

Amazon for years fought sales tax collection. But as the online seller has expanded its literal locations beyond its Seattle home, it's been unable to avoid the tax collection obligation.

A 1992 U.S. Supreme Court decision determined that when a business has nexus, generally defined as an actual physical presence in a state, that means the seller must collect applicable sales taxes in that state.

Amazon is spreading out, putting warehouses and distribution centers across the country. The tax price is just part of the deal. The company is hoping that even though some customers might balk at the new tax charges, they'll still buy online for the convenience factor. That should be improved by speedier delivery, thanks to the products being stored nearby.

Get ready, Ohio online shoppers. You could be next. Amazon reportedly is looking to build a facility in the Buckeye State.

Awaiting Congressional tax action

Of course, all of Amazon's piecemeal tax collections soon could be moot. Congress could move this year on the Marketplace Fairness Act. This bill would allow states to collect sales tax revenue from online and other retailers that aren't situated within their borders.

Senate Majority Leader Harry Reid, D-Nev., says he will bring the remote sales tax bill to a vote when Congress returns to work after the election. Right now, it looks as if Reid will pair the pro-online tax bill, for which support is still iffy, with an anti-online tax bill that is more popular.

The bill that might garner enough votes to pull the sales tax part along is the Internet Tax Freedom Act, or ITFA. It prohibits local taxes on Internet access.

The moratorium on taxes charged users for having an Internet connection was scheduled to expire Nov. 1. However, the no-tax rule was extended to Dec. 11, when it was included as part of the stopgap spending measure bill that's keeping the government operational.

If the Internet sales tax component is stripped from the no Internet access tax bill, lawmakers who support the online sales tax measure say they'll reintroduce the Marketplace Fairness Act when the new Congress convenes in 2015.

Does your state collect sales taxes on Amazon purchases? If so, has that changed your online shopping habits? If your state does join the growing Amazon sales tax list or if the Marketplace Fairness Act passes, would that affect your buying preferences?

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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

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October 07, 2014 at 5:29 pm

All of you that are avoiding the sales tax by making internet purchases need to keep in mind that many states require you to file a use tax return along with your income tax return, If your state requires this, you are required to report any purchases you made and pay use tax on any taxable items you brought back to "use" in your state. Amazon is only following tax the tax laws of the state in which they have Nexus.

Ruth Rowley
October 06, 2014 at 8:17 pm

OK....If you are going to add sales you will add shipping and as a Prime Customer...I resent the way I'm being treated......Immediately cancer my PRIME account because it isn't Prime anymore......Since it just rolled over, I want a refund for the entire amount......I buy so seldom from Amazon that I would just as soon pay shipping......I only kept the Prime account for the convenience.......CANCEL ME EFFECTIVE IMMEDIATELY.

October 06, 2014 at 7:20 pm

YOU need to lower your product pricing and you may just keep a few customers. To all Please stop allowing states and feds to take our hard earned money, no more taxes get smart and join together and get a flat tax rate to all 22%. just think what would happen more jobs more spending etc.....

Bob Bruce
October 06, 2014 at 4:00 pm

Sales tax cost you another Maryland customer. Hope to get out of Maryland due to the tax & spend democrats; before the end of next year. The sooner the better. If you like zipless sex; Maryland is the place to move. They even have a tax on rain! My water bill is so high that my ice maker should be putting out gold cubes instead of ice. AMF Amazon!

Mike Christopher
October 06, 2014 at 3:29 pm

I understand why Amazon has to tax in states where it has distribution centers since it's the law. If I lived in a state that had a distribution center I would certainly check other stores, brick and mortar and on-line. With shipping being as high as it is and adding tax to on-line purchases it can be more expensive than local stores. We have cut back our Amazon purchases since they raised their Prime cost.

If sales taxes are added to all on-line purchases it will really hurt on-line retailers. It is unfortunate we live in a time when almost all states and the federal government are so far in debt they will do anything to take more money. I can't understand why all local, state and federal governments cannot live within their resources like all the rest of us. The waste and corruption in government is becoming a real problem. Lets get rid of all of them and start over and perhaps we can start paying off the debt. They are all bought and paid for by the lobby groups and corporations.

October 06, 2014 at 10:08 am

it was such a nice relationship with Amazon, I will miss you very much. thought the higher rate with prime was worth it, but no more...Bye

October 06, 2014 at 10:07 am

it was such a nice relationship with Amazon, I will miss you very much. Bye

Michael Marsalek
October 06, 2014 at 9:19 am

As a Maryland resident, I promise that I absaolutely will not place any internet orders with sellers that charge any sales tax. Recently Governor & presidential wannabe Martin O'Malley cheefully enacted a ' rain tax ' to replenish the Maryland Highway T R U S T Fund because fund monies were misspent on "other things " ( Programs & Services for illegal aliens. )

October 06, 2014 at 2:35 am

Amazon is becoming that online power house thats going to loose allot of customers for obvious reasons.the Prime membership increase is not a deal any more. their online products across the board are not a deal. their shipping plus taxing now leads to i told you guys.
i shop at online Walmart Home Depot an others end up better deals.the online video service is really bad. renting a flick no option to buy. if the flicks hot the rental fee is high. what next Amazon adult toys and automobiles?

October 06, 2014 at 1:13 am

Kestrel Windhawk

Your statement to don is wrong tax are only collected if the company is in the same state the item is ship. I have bought many thing online and was not taxed, in live in pa and would have online orders del to work in MD to avoid the sale tax