Nevada Extends Amazon’s Sales Tax Advantage

Last week, Nevada Gov. Brian Sandoval (R) announced the state had worked out a deal with Amazon.com that would continue the online retailer’s sales tax advantage over Main Street businesses for another two years.

The Nevada deal exempts Amazon from having to collect and remit sales tax to the state until January 1, 2014, despite the online retailer’s two facilities in Nevada and a broad network of online affiliates. Importantly, unlike other states where Amazon.com has garnered a sales tax exemption in exchange for the promise of jobs, the Nevada deal does not call for the company to open any new facilities or to bring in more jobs, as reported by Internet Retailer.

American Booksellers Association CEO Oren Teicher called Nevada’s decision to provide Amazon.com with a two-year sales tax exemption “confounding,” and said it could set a bad precedent for other states looking to require the remote retailer to follow existing state sales tax laws.

“Despite Amazon.com having a clear presence in Nevada for many years now, through its facilities and its online affiliates acting as sales agents, so far it has skirted its obligation to collect and remit sales tax to the state,” Teicher said. “Nevada’s decision to reward Amazon by extending for two years its unfair advantage over in-state retailers is an extremely bad decision for the state’s many retailers, especially small businesses, which are currently obeying the law and are operating on an uneven playing field. This shortsighted policy decision by Nevada will ultimately result in continued job losses, more store closures on Main Street, and the further erosion of tax revenue for the state.”

Teicher noted that decisions like Nevada’s underscore that a federal solution is needed — and soon. “Clearly, states need to be able to make the decision to require remote retailers to collect and remit in the state without fear of lawsuits or economic bullying,” he said. “Our members in states like Nevada follow existing sales tax laws, it is time that remote retailers like Amazon.com do so as well — and not just when it fits their corporate strategy.”