Amazon Adds to List of States Where It Collects Sales Tax

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By Christopher Brown

Amazon.com Inc. will begin collecting and remitting sales tax on purchases shipped to Missouri and Mississippi beginning Feb. 1.

The Jan. 26 announcement brings to 39 the number of states where the online retailer collects and remits state and local sales tax, in addition to the District of Columbia. The company announced in December that it would add Iowa, Louisiana, Utah and Nebraska, and has recently added six more: Mississippi, Missouri, South Dakota, Rhode Island, Vermont and Wyoming. Amazon lacks a physical presence in many of these states.

There are now just six states that have a sales tax where Amazon isn't collecting: Arkansas, Hawaii, Idaho, Maine, New Mexico and Oklahoma.

A spokeswoman for the Missouri Department of Revenue declined to comment on the announcement, and said the department hadn’t prepared an estimate of the revenue that could result from the taxation of Amazon sales. An Amazon spokeswoman declined to elaborate on the announcement.

Convincing Congress

David Overfelt, president of the Missouri Retailers Association, called the announcement “great news,” and said it could help convince Congress to pass legislation that would provide a clear basis for the taxation of online and remote sales.

Several competing frameworks defining states’ authority to tax out-of-state sellers have surfaced on the Hill over the years:

  • the Marketplace Fairness Act (S. 698),
  • the Remote Transactions Parity Act (H.R. 2775),
  • the No Regulation Without Representation Act (H.R. 5893), and
  • the Online Sales Simplification Act (discussion draft).

“This removes a stone in our path, and helps us go forward to pass streamlining legislation and Main Street fairness at the congressional level,” Overfelt told Bloomberg BNA. “It is my understanding that Amazon would support a national law with simplification and definitions that would apply in every state, and that’s what we really need.”

But the announcement is just “one piece of the puzzle,” and many other online retailers will continue making Missouri sales without collecting sales tax, he said. “We need to keep working at this.”

Overfelt said he expects little movement in Missouri on the issue during 2017. “Our state hasn’t joined the streamlined sales tax effort yet, and there has been a bill introduced on that, but I don’t think we’re going to see any of the other approaches tried here,” he said.

The streamlined sales tax bill Overfelt referred to is S.B. 105. It has been assigned to the Senate Ways and Means Committee, but no hearing has been held on the bill yet. A spokesman for Sen. Will Kraus (R), chairman of the committee, told Bloomberg BNA that there would be no hearing on the bill “for at least a couple of weeks.”

There also have been two similar bills introduced in the House, H.B. 667 and H.B. 763, neither of which has been assigned to a committee. A House resolution, H.C.R. 11, would encourage Congress to pass the Marketplace Fairness Act, which would require out-of-state retailers to collect sales taxes. It also hasn’t been assigned to a committee.

Amazon to Collect in Mississippi

Adding more and more states to its list, Amazon will start collecting tax for online sales originating in Mississippi Feb. 1, the Mississippi Department of Revenue said.

The internet sales giant will collect a 7 percent use tax on purchases made in Mississippi, Kathy Waterbury, spokeswoman for the state’s department of revenue, told Bloomberg BNA. The use tax is a state tax and the company won’t collect municipal sales taxes.

Amazon’s announcement comes on the heels of the department’s proposed regulation requiring the collection and remittance of sales tax from remote sellers. Under the proposed regulation, remote sellers that voluntarily register to collect sales tax before July 1 will only be held liable on their sales into the state on a prospective basis.

Sellers that don’t voluntarily register and collect and report taxes on their sales will be assessed retroactively with no statute of limitations in determining the total tax liability. The proposed rule affects sellers with significant economic presence in the state, which is defined in the proposed regulation as sales exceeding $250,000 per year based on the previous calendar year. A hearing on the proposed rule is scheduled for Feb. 15.

There are currently two bills filed in the Mississippi Legislature that mirror the proposed regulation, H.B. 480 and S.B. 2456.

Colorado Approach

Max Behlke, manager of state-federal relations for the National Conference of State Legislatures, has told Bloomberg BNA that at least 36 bills have been introduced in 18 states in 2017 related to sales tax on transactions by remote sellers.

Many of these bills follow the approach taken in Colorado, where the Legislature passed a bill requiring online sellers either to collect and remit the tax or report sales to state residents to the Department of Revenue.

Overfelt said a bill like Colorado’s wouldn’t likely get much support in Missouri. “I don’t think our Legislature has much stomach for giving the Department of Revenue authority to go in to audit individual taxpayers,” he said. “And most people in Missouri wouldn’t be happy about that kind of personal information being shared with the department.”

The approach taken in South Dakota, where the Legislature passed a bill creating a sales threshold for establishing nexus with the state, makes more sense in Missouri, but would almost certainly be challenged in the courts, he said. “Bills like the South Dakota one have merit in my mind, but they’re aimed at the Supreme Court, and it would take a long time to settle it,” he said.

“We’d rather see the Congress take on and settle this issue once and for all.”

With assistance from Nushin Huq in Houston.

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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