Amazon collecting sales tax in 23 states

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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.”