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Amazon collecting sales tax in 40 states & D.C.

Amazon's tax collection system expands on March 1 with Oklahoma and Wyoming joining the ever-growing list of locations where online customers will see sales tax added to their purchases.

Amazon box by MikeBlogs via Flickr CCPhoto by MikeBlogs via Flickr

In February, five more states -- Mississippi, Missouri, Rhode Island, South Dakota and Vermont, joined the Amazon sales tax list.

With the addition tomorrow, March 1, of two more, that will bring the number of taxing jurisdictions where the Seattle-based online retail giant will be collecting sales levies to 41.

In addition to collection sales tax on products shipped to Washington, D.C., the table below shows the 40 states where, in less than 24 hours, Amazon will be collecting sales taxes.

Alabama  Kansas  Nevada South Dakota 
Arizona  Kentucky  New Jersey  Tennessee
California  Louisiana  New York  Texas 
Colorado  Maryland  North Carolina  Utah 
Connecticut Massachusetts  North Dakota  Vermont 
Florida  Michigan  Ohio  Virginia 
Georgia  Minnesota Oklahoma  Washington 
Illinois  Mississippi Pennsylvania West Virginia
Indiana Missouri   Rhode Island  Wisconsin
Iowa  Nebraska South Carolina  Wyoming 

Since 5 states don't collect a state-wide sales tax, that leaves just five states where Amazon customers -- and, in some cases, other cyber shoppers -- won't see sales taxes added to their online invoices.

The still Amazon tax free states, for now, are Arkansas, Hawaii, Idaho, Maine and New Mexico.

Not stopping at Amazon: Since Amazon is the largest global online retailer, it is viewed as a sales tax collection bellwether. The hope of the 40 states and District of Columbia is that other companies will follow Amazon's tax collection lead.

But several of the 45 states with sales taxes aren't waiting for that to happen.

In addition to welcoming Amazon's collection action, they are continuing legislative efforts to try to get every possible sales tax penny they're due.

Take, for example, Colorado's unpopular tattletale tax. Beginning July 1, if an online seller doesn't follow Amazon and collect sales tax on items sold to Colorado customers, the company must instead send state officials sales data so Centennial State tax collectors can focus on getting the money from the buyers per the state's use tax law.

Three states -- Louisiana, Oklahoma and Vermont -- have passed laws similar to Colorado's.

And of the five states where Amazon does not yet collect sales taxes, Arkansas, Hawaii and New Mexico lawmakers are considering legislation that would broaden nexus.

Another high court sales tax decision: Meanwhile, South Dakota's sales tax law soon could rewrite nationwide sales tax collection on remote sales. 

The Mount Rushmore State's law says that remote sellers with no physical location still must collect and remit sales tax on online purchases sent to customers within its borders. That directly challenges the nexus requirement cited in the U.S. Supreme Court's 1992 Quill v. North Dakota ruling that now governs interstate tax collection. 

This challenge to nexus is working its way through the legal system.

That's exactly what South Dakota officials hoped when they enacted the law. They and other state officials hope the South Dakota law will supplant the one from its northern neighbor when it comes to taxation of online and other remote purchases.

A decision by the nation's highest court, along with Amazon and other online retailers voluntarily expanding their sales tax collection to the remaining five states (you know it will happen eventually) could make stalled Congressional efforts to deal with online taxes irrelevant. 

Insert your own House and Senate effectiveness joke here.

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