Don't Mess With Taxes

It's getting harder to escape online sales taxes.

As of today, Sept. 1, shoppers in Georgia and Virginia who purchase products from the internet giant Amazon will see their states' sales taxes added to their bills.

This brings to 12 the number of states in which Amazon collects sales taxes. That's also this week's By the Numbers figure.

Photo by MikeBlogs via Flickr Creative Commons

The dozen states, so far, where Amazon collects sales taxes are Arizona, California, Georgia, Kansas, Kentucky, New Jersey, New York, North Dakota, Pennsylvania, Texas, Virginia and Washington.

Expanding nexus: In most states where Amazon has agreed to collect sales taxes, the online seller has tied the tax collection to physical nexus that is or will soon be located in the jurisdiction.

Nexus is the standard, thanks to the 1992 U.S. Supreme Court Quill v. North Dakota decision, whereby retailers must collect sales taxes from out-of-state customers when the business has a physical presence in the purchasers' state.

Of interest in the Peach State is that Amazon does not have a bricks and mortar facility in Georgia and apparently, per the Atlanta Journal-Constitution, does not plan to build warehouse, distribution or other operations in the state.

To get around the physical presence issue of Quill, some states, including Georgia, have enacted laws that expand the nexus concept to companies' in-state affiliates. This covers the folks who get paid when Amazon ads on their websites are clicked.

The Georgia law, which took effect in January, also covers companies that use physical facilities within the state even if they don't own them. And that's seems to be the hook for the online giant in Georgia.

Amazon owns Fabric.com, a Georgia-based website that notes in its FAQ that it has "a large warehouse distribution facility."

It's unclear, however, why it took until September for Amazon to be affected. I suspect now that big dog Amazon is complying with the law, the state will go after other online retailers who are ignoring the law.

State tax officials estimate that Amazon's collections could net the state $18 million a year.

Some Georgia shoppers, however, say they no longer will shop Amazon.

"The amount of shopping I do online with Amazon will go down drastically. I will find other Internet retailers who still don't collect the sales tax to purchase from," writes Clifford Martin in comments responding to CummingPatch's question "Will Amazon's Tax Collection Change Your Spending Habits?"

Beachbum, however, takes a different approach: "The convenience of buying unique products that are not sold in Cartersville. No gas money spent, no time spent running around looking for different things. Last year I did 80% of my Christmas shopping online (mostly Amazon) and this year I hope to do 100% of it without having to step foot in the store. I have no problem paying the sales tax; was never an issue for me."

Yes, Virginia, there is an Amazon tax: Today, Sept. 1, also is a dreaded day for online shoppers a few states northward.

Virginia now requires out-of-state Internet retailers that have business operations in the state to start collecting its 5.3 percent state sales tax (4.3 percent goes to the state and 1 percent to local jurisdictions).

And yes, Northern Virginia and Hampton Roads area residents, this also applies to your 0.7 percent higher sales tax rate of 6 percent.

And again unlike in Georgia, Amazon's Virginia deal also included two fulfillment centers in Virginia, an investment of around $135 million and the promise of more than 1,350 jobs.

When Virginia lawmakers passed the online sales tax bill last year, state officials estimated that the Old Dominion would receive as much as $24 million in additional state and local sales tax revenue.

You also might find these items of interest:

• Amazon heading to Florida, leaving Minnesota
• Useless use taxes lead to national online sales tax collection
• Amazon tax vs. existing state use taxes