Amazon to Start Collecting Sales Tax in California and Pennsylvania

The push for sales tax fairness in California and Pennsylvania, which came to a head in 2011, will bear fruit next month. Starting on September 1 in Pennsylvania and September 15 in California, Amazon.com is set to collect and remit sales tax for orders made by residents of their respective states.

In Pennsylvania [1], a Department of Revenue (PDR) regulatory bulletin [2], issued on a December 1, 2011, made clear that under existing state sales tax laws remote sellers with nexus in the state through warehouses or online affiliates are required to collect and remit sales tax for purchases made in state. PDR at first set a compliance deadline of February 2012; however, that was later pushed back to September 1. If companies with nexus “blatantly disregard the Tax Bulletin and their obligations to begin collecting sales tax, [PDR] has the statutory authority to look back at least three years for audit and assessment purposes.”

The state expects that the change will bring in an additional $42.8 million for the 2012-13 fiscal year, according to a report in the Pittsburgh Post-Gazette [3].

In California [4], in September 2011, Gov. Jerry Brown signed a sales tax fairness bill that stipulated that Amazon.com must begin collecting and remitting sales tax to the state beginning September 15, 2012, unless federal sales tax fairness legislation is passed before then.

While there are currently two bills under consideration in Congress — the Marketplace Equity Act (H.R. 3179) in the U.S. House of Representatives and the Marketplace Fairness Act (S. 1832) in the U.S. Senate, there is almost no chance that either will be passed before the deadline of September 15.