Even as e-fairness supporters on Capitol Hill have said that they will soon re-introduce federal sales tax fairness legislation, the national landscape regarding equitable sales tax collection has shifted dramatically, according to figures tabulated by the American Booksellers Association. The data shows that 57 percent of the U.S. population currently resides in states with sales tax fairness laws. And 48 percent of the population lives in states where Amazon.com collects and remits sales tax.
“These numbers very clearly show that, over the past five years, Main Street retailers and their allies in a growing number of states have been winning the fight for fairness,” said ABA CEO Oren Teicher. “Today, a retailer is in the minority if his or her state has not leveled the playing field through sales tax fairness legislation. Those retailers in states that are not equitably collecting sales tax have every reason to feel optimistic, but, as we have seen, change only comes when they and their allies stand up for Main Street.”
In a matter of weeks, federal sales tax fairness legislation will be reintroduced in the U.S. House of Representatives and Senate. In the meantime, Teicher said, it is likely that more states will be voting on legislation that would require online retailers to collect and remit sales tax.
Given its rapidly growing sales, Amazon.com has assumed the highest profile in the e-fairness fight, and it made headlines by firing its online affiliates in many states where recently passed affiliate nexus laws would require it to collect sales tax. But as the tide has begun to turn in favor of sales tax fairness, and the company began looking to implement more rapid delivery to its customers, Amazon.com negotiated deals with a number of states to postpone its obligation to collect sales tax in exchange for opening in-state warehouses. As the company's strategy evolved, it also became a proponent of federal sales tax fairness legislation.
“Up until 2007, Amazon.com was only collecting sales tax in Kansas, Kentucky, North Dakota, and Washington, because it has its original warehouses in those states. Today, Amazon.com, along with a growing number of remote retailers, collects in eight states. Importantly, by 2014, Amazon.com will be required to collect and remit sales tax in 16 of the 45 states that collect sales tax,” Teicher said. “That is a significant turnaround from just five years ago. And while this campaign has never been just about Amazon.com, what is important about these developments is that it has resulted in Amazon now advocating for a federal solution to the issue.”
Here’s an overview of the current sales tax fairness landscape:
States that now require remote retailers with either warehouses or online affiliates in their state to collect and remit sales tax: California, Pennsylvania, and Texas.
States that require remote retailers with warehouse facilities in their state to collect and remit sales tax: Kansas, Kentucky, North Dakota, and Washington.
States where Amazon.com has made a deal with a state to collect sales tax in exchange for opening up a warehouse (and is scheduled to collect by no later than 2016): Arizona, Indiana, Massachusetts, Nevada, New Jersey, South Carolina, Tennessee, Texas, and Virginia.
States that passed affiliate nexus laws: Arkansas, Connecticut, Georgia, Illinois (the law was struck down by a lower court), New York, North Carolina, and Rhode Island. (In every state but Georgia and New York, Amazon.com fired its online affiliates rather than collect and remit sales tax. Amazon.com is challening the New York law and in Georgia it is not yet collecting.)
States that passed laws requiring remote retailers to notify their customers that a use tax is owed: Colorado (subsequently struck down), Oklahoma, and South Dakota.