Amazon will begin collecting sales tax starting April 1 in all states with sales tax. The move is the final pin to fall as the government has tried to push taxes on online retailers to level the field with brick and mortar stores.
Starting April 1, sales tax will be collected in Hawaii, Idaho, Maine and New Mexico—four of the last hold outs. These four states are the latest to join the list of states Amazon has begun collecting sales tax. Just this month, ten states entered the list, including Mississippi, Louisiana and Iowa. The list will now cover 45 states. The lone five exceptions—Alaska, Delaware, Oregon, Montana and New Hampshire—don’t have sales levies.
The topic of online retailers paying sales tax has been gaining notoriety over the past few years. The National Conference of State Legislature estimates $23.3 billion in revenue has been lost from online retailers not paying sales tax. Amazon is the biggest online retail store, so naturally it’s the top dog the government is going after.
Why wasn’t Amazon paying sales tax?
The reason most online retailers can get off from paying tax is tied to the ruling of Quill Corp. v. North Dakota in which the court ruled that states can’t enforce online retailers to pay sales tax unless they have a physical presence in the location a customer purchased the product. Amazon has been rapidly expanding its physical presence with distribution centers. It’s coverage under the court ruling has eroded as it has grown and it’s now acquiesced to paying sales tax.