Amazon.com Begins to Collect Sales Tax in Kansas

Last week, Amazon.com announced that it would begin to comply with Kansas' new streamlined sales tax law, which requires retailers with remote sales that have an affiliated company in the state to collect sales and use tax. Amazon, which has an automated distribution center in Coffeyville, Kansas, will begin collecting Kansas state sales tax starting April 1.

And while Amazon claimed its decision was prompted by a new Kansas sales tax law, ABA COO Oren Teicher noted that the tax laws in the 45 states that collect sales and use tax have always been clear: When any business, or any online business with a physical counterpart within the state, makes a sale to a customer within that state, it is required by law to collect sales tax. "There is no longer any debate that when retailers have physical locations in a state, they have an obligation to collect sales tax," Teicher said, and further stressed, "we also firmly believe that in many states, this obligation extends to those retailers who maintain affiliate relationships with those entities with physical locations within that state. The time is long past for governments to stop playing favorites between retailers and to enforce the laws equitably."

Kansas enacted changes to its sales tax law because it is part of a consortium of 38 states that have enacted legislation to implement the requirements of the Streamlined Sales Tax Project (SSTP), a national effort to help states collect revenue lost through catalog and Internet purchases. Prior to the change, Kansas tax law stated that the taxable point of sale was the company origin; now the taxable point of sale is the selling destination, as reported by Business Wire. According to the Associated Press, Toys R Us, Babies R Us, and Target already remit sales tax from Internet and other offsite sales to the state of Kansas.

Patty Smith, a spokesperson for Amazon.com, told BTW that, although Amazon collects sales and use taxes in Washington, North Dakota, and soon Kansas, she did not foresee the company making the move to collect tax from any other states, such as SSTP-participating Kentucky, where Amazon has a distribution center. However, Smith stressed that Amazon does not oppose the collection of Internet taxes "if the system were truly and fairly simplified and applied even-handedly."

At present, politicians in Washington are working on doing just that. In the past year, in both the U.S. House of Representatives and the Senate, bills have been introduced that would allow states to simplify sales tax regulations and give states the authority to require remote sellers to collect and remit sales and use taxes. In late September 2003, Representatives Ernest Istook (R-OK) and William Delahunt (D-MA) introduced the Streamlined Sales and Use Tax Agreement (SSUTA, H.R. 3184) in the House; and, two weeks later, Senator Michael Enzi (R-WY) introduced similar legislation, S. 1736, the Streamlined Sales and Use Tax Act (SSUTA), in the Senate. --David Grogan