From April 1, Amazon, the U.S.-based online retailing giant, will be collecting sales taxes from all states. People who are currently enjoying the tax-free shopping on Amazon should know that they will have to start paying taxes as of next month in New Mexico, Idaho, Maine and Hawaii. These four places are the only remaining holdouts in the United States currently and tax-free shopping would end on March 31 in the said places.
There are still five states that will enjoy tax-free shopping after April 1
The e-commerce giant has, since the beginning of 2017, included several states to its roster of jurisdictions where the company collects sales taxes. In a statement, George Gervais, commissioner of the Maine Department of Economic and Community Development, said, “Maine businesses can go toe-to-toe with the very best out -of-state companies, provided they are competing on an equal playing field.” The online retailing giant is facing tough competition from other e-commerce giants like Alibaba Corp., eBay, etc., which is why it keeps on bringing new features and new offers to attracts more customers towards its site.
Gervais said, “Amazon’s decision to collect and remit sales tax to the state of Maine is an important first step in leveling the playing field.” The commissioner notes that the growing revenue from sales levies will assist in reducing the income taxes of the state. After 1st April, the only states which will not be affected by the current announcement of ‘end of tax-free shopping’ are Oregon, Delaware, New Hampshire, Alaska, and Montana. These mentioned five states do not have sales levies.
24 states have adopted the Streamlined Sales Tax Agreement
According to the estimations of the National Conference of State Legislatures, in 2012, the states lost around $23.3 billion in revenue because of their inability to collect sales taxes from online sales. The decision of court, according to CNBC, was “states couldn’t require retailers to collect sales taxes unless they had a physical presence in the same place where the buyer is located.”
By building warehouses, data centers and other facilities in several locations, the big online retailing sites like Amazon Inc., will fall more and more under the court’s decision. According to Richard C. Auxier, a research associate at the Tax Policy Center, even if an e-commerce site does not have a brick-and-mortar location in a specific state, the state may require the buyers to pay use taxes on consumer’s purchase.
He said, “Everyone owes taxes on online purchases, be it from Amazon or a small retailer. The question we deal with is ‘Who collects the tax?’ A group of around 24 states has adopted the Streamlined Sales Tax Agreement. This agreement enables retailers to collect taxes voluntarily.