Amazon.com: It's Feasible for Online Retailers to Collect Sales Tax

On Wednesday, February 8, representatives from Amazon.com and eBay Inc. told the U.S. House of Representative's Small Business Subcommittee on Regulatory Reform and Oversight that collecting sales tax on online purchases is within the industry's capabilities.

"Amazon.com does not have a position on this high level policy question; there are sound arguments on both sides," Paul Misener, Amazon.com's vice president for Global Public Policy, told the House subcommittee. "We concluded almost six years ago, however, that it certainly would be reasonable for policymakers to decide that the tax should be collected by sellers. We also concluded that Amazon would not be hurt by a sales tax collection requirement, so long as the administrative burdens of collection were eliminated and that our online competitors also would be required to collect." (Misener's comments can be read in full on the House website [1].)

In a related story, earlier this week, Bookselling This Week reported that Barnes&Noble.com had begun collecting online sales tax in 38 states [2]. Since its inception, B&N has been collecting sales tax on online orders in New York and New Jersey, where it has offices and a company warehouse. It has also been collecting online sales tax in Tennessee and Nevada since 2000, when it opened additional warehouses. The company website currently notes, "In accordance with applicable law, Barnes&Noble.com collects tax in all but the following states: Arizona, Hawaii, Louisiana, Maine, Mississippi, New Mexico, Vermont, and the District of Columbia." States that have no sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon.

"Judging from these actions taken by Barnes & Noble and the recent testimony by Amazon.com, it certainly appears that our arguments in favor of sales tax equity are being heard," said ABA COO Oren Teicher. "We are very pleased that such significant online retailers as B&N and Amazon.com are in favor of a level playing field for all retailers." For several years, ABA, along with the regional booksellers associations, has been working with other members of the E-Fairness Coalition to help ensure that online merchants collect applicable state sales taxes, as do in-state bricks-and-mortar stores. The coalition represents over 350,000 retail stores nationwide.

Sen. Michael Enzi (R-WY), who in December introduced the "Sales Tax Fairness and Simplification Act" (S. 2152) in the Senate, submitted written testimony to the subcommittee in which he called for Congress to "level the playing field for all retailers" by "imposing uniformity, simplification, and fairness concerning the taxation of remote sales over the Internet."

Enzi wrote, "As a former small business man, it is important to level the playing field for all retailers -- in-store, catalog, and online -- in order that an outdated rule for sales tax collection does not adversely impact small businesses and Main street retailers. I believe S.2152 ... achieves this goal in accordance with the simple rules provided for all businesses under the Streamlined Sales and Use Tax Agreement (SSUTA)."

Implemented by the Streamline Sales Tax Project (a coalition of participating state governments), SSUTA outlines a comprehensive system to simplify the states' sales tax rules and to dramatically reduce red tape for America's businesses. At present, 19 states have enacted legislation to change their tax laws and implement the requirements of SSUTA, which became effective on October 3, 2005.

The E-Fairness Coalition issued a statement in support of Enzi's legislation and noted that "the Act would have a very positive effect on our country's small businesses."

In his testimony to the House subcommittee, Enzi stated, "[S.2152] is not a disguised attempt to increase taxes or put a new tax on the Internet. Consumers are already supposed to pay sales and use taxes in most states for purchases made over the phone, by mail, or via the Internet."

"All retail sales and the vendors that make them should be treated equally," Enzi stressed. "Adoption of [SSUTA] and Congressional authorization will provide a level playing field for brick and mortar and remote retailers and will reduce the administrative burden for small and large sellers already subject to the collection obligation." --David Grogan [3]