“Tax-free” shopping on Amazon.com will come to an end in just a few days for Minnesota and Maryland residents, as the online retailer will begin collecting sales tax on purchases made in both states starting Oct. 1, 2014. Minnesota and Maryland will become the 22ndand 23rd states in which Amazon will be required to collect and remit sales tax. Customers in states in which Amazon is not required to collect sales tax still have the obligation to submit use tax to their states; however use tax compliance is difficult to enforce in most states.
The debate on whether remote retailers should be required by federal law to collect and remit sales taxes on purchases made by customers in other states, when the retailer has no physical presence in the state, is still ongoing. The physical presence standard was set in the U.S. Supreme Court’s landmark Quill Corp v. North Dakota, 504 U.S. 298 (1992), where the Supreme Court found that a taxpayer must be physically present in the state to be obligated to collect and remit sales and use tax to the state.
With online shopping on the rise, the Quill decision is arguably antiquated, which has caused many states to enact their own click-through nexus laws with requirements that trigger sales tax collection and remittance obligations for remote retailers. The Market Place Fairness Act, which would give states authority to compel online retailers in other states to collect sales tax on Internet-based sales on their behalf, is currently pending in the House, after passing the Senate in 2013.
In Maryland, Amazon plans to open a fulfillment center in Baltimore, which will certainly create jobs for the state, but at the same time creates the obligation for Amazon to begin collecting tax from residents. In Minnesota, although Amazon announced that it “will be required” to begin collecting tax, no known fulfillment centers have been spotted in the state.
Amazon already collects sales tax on purchases made by residents in the following states:
|Indiana||North Carolina||West Virginia|
Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Do you think residents in Minnesota and Maryland will continue to shop on Amazon.com even though their purchases will not be tax free?
Sign up for a free trialof the Bloomberg BNA Premier State Tax Library and see a detailed discussion on state sales and use taxes.
By Ean Hamilton
Follow us on Twitter: @BBNAtax.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)