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Amazon begins collecting sales tax from Florida buyers May 1; Will the online retailing giant lose even more customers?

Sorry Florida online shoppers. Effective today, May 1, Amazon is now collecting sales tax on your purchases.

t's not just CDs or books that will cost Sunshine State shoppers a few dollars more. Everything that's now delivered to a Florida address will have the applicable state and local sales taxes tacked on to the invoice.

Amazon box by MikeBlogs via Flickr CC
Photo by MikeBlogs via Flickr Creative Commons

The reason for the tax collection? State law requires the Florida Department of Revenue to collect sales taxes from companies if they have a physical presence in the state.

Amazon is well on its way to meeting that requirement. It's building two distribution centers in Polk County and near Tampa

With today's addition, Amazon or its subsidiaries now collect sales tax in 21 states. They are:

Arizona, California, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Massachusetts, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

Taxes taking a sales toll: Although Amazon has reversed its original anti-sales-tax stance and now supports a national standard for collecting the levies, it could be costing the company.

Two studies by researchers at Fisher College of Business at Ohio State University came to the same conclusion. Amazon sales have suffered in states where it collects sales tax.

Households cut their Amazon purchases by almost 10 percent once they had to start paying sales tax. 

And the more they shopped, the bigger the drop. Ohio State researchers say that online purchases of more than $300 fell by 24 percent.

"For the most part, consumers simply switched their spending to other online retailers that didn't have to collect the tax," said Itzhak Ben-David, associate professor and Neil Klatskin Chair in Finance and Real Estate at Ohio State and co-author of one of the studies.

“Unless there is some kind of national legislation, there will be loopholes that consumers can use to continue to avoid sales tax on some online purchases," said Hoonsuk Park, a doctoral student who worked with Ben-David.

How about you? Does Amazon now collect taxes on your online purchases? Has it changed your Internet shopping pattern?

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