Sales Tax Slice: Amazon Prime Day a Prime Opportunity to Boost State Tax Revenue


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Next week, from Monday, July 16 through Tuesday, July 17, 2018, Amazon.com will hold its annual “Prime Day” sale. The event offers deals on items ranging from televisions to toilet paper for Amazon’s 100 million Prime members. Prime Day has become one of the biggest shopping days of the year in the U.S., with an estimated $1 billion in sales in 2017, making it not only a major revenue-generator for the company, but for states imposing sales taxes as well.

This year’s Prime Day is the second since Amazon began collecting sales tax on its own sales in every state on April 1, 2017. States stand to make big bucks as a result of this increased collection, since the majority of items Amazon sells on Prime Day, like electronics and small appliances, are taxable. This could prove especially welcome in places like Illinois and Louisiana, where legislatures have struggled to balance budgets. The majority of states now tax charges for Prime memberships as well, meaning that an increase in Prime members due to the sale will also provide a boost to state tax collections.

Additionally, 2018 marks the first year that Amazon will collect sales tax on sales through its marketplace platform in some states. The retail juggernaut states that it collects and remits the tax on sales by third parties in Oklahoma, Pennsylvania, and Washington under those states’ marketplace facilitator laws. Prime Day 2018 may prove to be somewhat of a bellwether for similar actions in other states, by showing the potential dividends of imposing sales tax collection requirements on facilitators.

Regardless of the outcome for Amazon or state tax departments, Prime Day is sure to be a hit with consumers once again this year.

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Do retail “holidays” like Prime Day provide substantial additional revenues to the states? Will more states start to pursue marketplace facilitator collection?

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