Bloomberg Law: Trump’s Amazon Tweet Comes at Eventful Time for State-Local Taxes

Meanwhile, Amazon may not be paying its share of local sales taxes. A report released March 26 by the left-leaning Institute on Taxation and Economic Policy said Amazon either doesn’t collect and remit local sales tax or is charging a lower sales tax rate than traditional retailers in seven states: Alabama, Alaska, Idaho, Iowa, Mississippi, New Mexico, and Pennsylvania.

The reason for this varies across states, including Amazon applying interstate “use taxes,” which in some cases don’t include the local tax rate, the report said. In other cases, state law requires sales tax to be assessed based on the location of the seller rather than the buyer.

This tax collection problem presents two challenges for states and local jurisdictions. One, by not universally collecting sales tax, Amazon and other e-retailers are maintaining an unfair advantage over traditional retailers, according to ITEP.

Two, localities that aren’t able to collect sales tax from online retailers may be at a disadvantage in the near future as Congress and the U.S. Supreme Court are considering expanding state and local sales tax collection authority, ITEP said.

“After decades of waiting, state and local governments might soon have the authority to collect sales taxes on online purchases made by their residents,” Carl Davis, ITEP research director and author of the report, said in a statement. “But some cities aren’t going to see a dime in new revenue unless state or local laws are updated.” Read more

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