The "Amazon Law": Should All States Adopt it?
Michael Mazerov has written an article on "The Center on Budget Policy and Priorities" website entitled, "New York’s “Amazon Law”: An Important Tool for Collecting Taxes Owed on Internet Purchases."
Click on the following link to access the article:
Synopsis of Article
The article states or argues that all states should consider imposing the "Amazon Law" similar to New York to require remote online sellers to collect sales tax from their purchasers. The article states that failure to tax internet sales is harmful and inequitable, and allowing states to tax internet sales would help states close a significant part of the internet sales gap.
My ObservationsI agree with the article, in that the taxes on remote sales are currently legally taxable and collectible. It just so happens, that they are currently taxable and collectible from the purchaser, not the remote seller. Therefore, every business and individual that makes a taxable purchase from a remote or online seller, is required to report the sale and pay "use tax" to the state in which the purchaser lives or is using the item purchased.
Since "use tax" compliance is difficult to enforce, enacting or adopting of an "Amazon Law" allows states to obtain the tax from the seller instead of the purchaser; thereby, supposedly increasing compliance and state revenues.
The article discusses how large remote sellers/retailers already collect sales tax in most states (due to other factors); therefore, compliance would not be burdensome for them. My question is, what about all of the smaller businesses or middle-market businesses that sell over the internet? These business most likely do not already collect sales tax in most states; therefore, the increased compliance may be burdensome for them?Conclusion
Overall, the article makes interesting points in support of the "Amazon law;" however, at this time, I'm still not sure the law is constitutional, and its implementation or enactment may be more burdensome than expected.What do you think? Please comment on this post or e-mail me at firstname.lastname@example.org with your opinions.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at email@example.com.
Because state and local taxes are deceptively simple and endlessly complicated.