Amazon’s Love Note to Senate Backs Sales-Tax Proposal
Amazon sent a love letter to the U.S. Senate on Valentine’s Day, thanking senators for a proposal that could put to rest the company’s long-standing sales-tax issues.
The Marketplace Fairness Act was introduced to the Senate today, which would enable states to collect sales tax online, as long as they have simplified their tax laws.
In a letter, Paul Misener, Amazon’s VP for global public policy, said, “I am writing to thank you for your bill, which will allow states with simplified rules to require sales tax collection by out-of-state sellers who choose to make sales to in-state buyers.”
Misener never comes out and explicitly says that Amazon supports the bill, but he hints that, with close cooperation, it could be a winner: “Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers.”
Collecting sales tax can be a nightmare. Not only does it depend on what state or country the customer lives in, but also on where the purchaser is — down to the city block, potentially — if he or she is buying something on the phone. Depending on the state, it could also be determined by the shipping address.
Amazon has been considered a prime example for why tax reform is needed. Since it was founded in 1994, the retailer has taken extraordinary measures to avoid collecting sales taxes nationwide, although more recently its stance on the subject has been softening. It now collects taxes in more than half a dozen states. Most recently, it agreed to start paying sales tax in Pennsylvania, Texas, California and Connecticut.
Brick-and-mortar retailers have contended for years that Amazon had an unfair advantage because it did not collect sales tax at the time of purchase. (Technically, it is the customers’ responsibility to pay the taxes, but that’s not very practical.)
The Marketplace Fairness Act is being introduced by Sen. Richard Durbin, an Illinois Democrat, and two Republicans, Sens. Mike Enzi of Wyoming and Lamar Alexander of Tennessee. Under the law, states will have two options for simplifying their tax-collection process. Retailers that have less than $1 million
$500,000 in out-of-state sales the prior calendar year can apply for exemption.
According to the Marketplace Fairness Act homepage, a long list of companies support the proposal, including Amazon, Best Buy, Barnes & Noble., Gap, Home Depot, J.C. Penney, REI, Sears, Target and Walmart. One of the organizations listed in opposition is eBay.