Update, 12.04.13: The U.S. Supreme Court refused to hear appeals by Amazon and Overstock.com regarding New York’s online sales tax law (or Amazon tax). New York was the first state to pass an Amazon tax back in 2008, and Amazon has been fighting the law ever since.The Court’s refusal to address the law may signal a new trend where more states require online retailers and other remote sellers to collect sales tax.
So-called “Amazon Taxes” or “Amazon Laws” often get the lion’s share of media attention when it comes sales tax (see interactive map below for which states have Amazon Tax laws). This is no surprise. “Amazon Taxes” are state laws specifically designed to compel Amazon to collect state sales tax. These laws can spark controversy between Amazon and states that results in major economic consequences. For instance, Amazon closed down a warehouse in Texas when the Texas Comptroller handed the company a $269 million sales tax bill (they have since reached a deal).
The intense focus on Amazon leaves many businesses incorrectly assuming the laws do not apply to them. In point of fact, there are plenty of circumstances in which these laws do apply to all types of businesses that sell across state lines (whether online or otherwise).
States are already taking action to go after businesses that aren’t in compliance. California made the decision to hire over 100 auditors, lawyers, and tax specialists over the next three years to do just that. If an Amazon Tax law applies to your business and you don’t comply, you are at a high risk of incurring penalties, interest and, in some cases, criminal charges in the event of a state audit.
How to avoid penalties
What can you do to ensure you’re not one of the businesses forced to pay extra penalties and interest because you did not comply with Amazon Tax law? The first step is to find out whether you have online sales tax liability in states where you are not currently collecting and remitting tax. We’ve created the interactive map below so you can do exactly that. Click on the highlighted states to discover what kind of Amazon Tax laws are in effect there (map key below). If you find any Amazon Taxes that might apply to your business see the next steps portion of this blog.
(click on highlighted states to see laws)
If you have determined that your business may have sales tax liabilities under one or more Amazon Laws, there are several steps you can take to comply with laws and avoid fines:
- Find the rate. Use a sales tax calculator to get an idea of what the sales tax rate is in the states where you may need to collect.
- Talk to the pros. Consult with our team of sales tax professionals to determine how best to take care of your liability.
- Automate. Discover how sales tax software can take care of sales tax for you, automatically calculating rates and filing with states.