Minnesota and Maryland are the two newest states that are going to start charging sales tax made from online transactions through Amazon. This makes them the 22nd, and 23rd states to start charging sales tax from these purchases. The idea is quite strange to those of us who do not have to pay such taxes and it can be fairly annoying.
After this change about 69% of Americans are required to pay sales tax from the giant eCommerce site. This is a popular move among state legislatures because Amazon makes 17 billion dollars in sales (Quarter 4 of 2013). This move is not something that I would enjoy however, I am in a state where it is not required for us to pay sales tax on Amazon transactions.
It is expected that sales tax will be collected from South Carolina users come 2016. This is after a deal that Amazon struck to build a warehouse in the state. As Amazon starts to branch out to more states sales taxes are going to follow.
For those of you paying sales tax on purchases made through Amazon what do you think of it? Is it necessarily fair?
Amazon has claimed that their business has a disadvantage to other websites such as eBay ever since a 1992 supreme court ruling that states any state where the company resides (some states include partners of the host company) can be charged sales tax.
Websites like eBay which are the middle man of transactions do not suffer the same problem unless they are directly in that state as well. However, eBay not requiring large stock piles of warehouses like Amazon has never had this large of an issue. In fact Amazon makes very little profits despite its transactions. This makes it more difficult on the retailer as it tries to expand to even more states. Amazon is reportedly working on a new data center in Ohio which when completed would require Ohio citizens to start paying sales tax on all Amazon transactions.
Difference Between Amazon and Other Ecommerce Websites
Amazon is really the main target of this bill because many Ecommerce websites focus on online content such as downloadable e-books or other downloadable products. They are not in any danger of this threat as many do not have their own data centers. Other competitors in the area such as eBay and other online websites also do not have to worry about the tax due to the fact that they are not the ones delivering or selling the product they are just a way to communicate between buyers and sellers.
Does It Truly Hurt Amazon?
That is hard to say amazon does struggle to make a decent profit as it does but this small tax shouldn’t affect them that much. However, it is not really fair to target Amazon and it would appear that it was done so deliberately towards this particular market place. There is no real proof that it was a so called “Amazon Tax” however this tax happens to only affect the worlds largest Ecommerce website and that is not just a coincidence.
This tax will not be adopted as a national standard however, it is growing quite rapidly across many states and the more Ecommerce websites that pop-up the more of them that will start effecting.