Amazon (Nasdaq: AMZN) shoppers in Indiana, Nevada and Tennessee are starting the New Year by having to pay sales tax on their Amazon purchases. The tax goes into effect in those three states because Amazon has agreed to build two new warehouses in Tennessee and to resolve long-running disputes with state officials in Nevada and Indiana.
Amazon already collects tax in 16 states, and in 2016, it will begin collecting tax in South Carolina. In the three latest additions, the levies are expected to generate more than $50 million a year collectively, according to state officials.
The tax collection is part of an ongoing battle between e-commerce businesses and stores. Brick-and-mortar retailers must collect sales tax, but online retailers don't in many states, which retailers contend gives them a pricing edge. Amazon had long sought not to collect sales tax in most states and court decisions generally allow only states in which a retailer maintains a physical presence to require the retailers to collect sales tax.
Amazon's position was challenged, however, last month when the U.S. Supreme Court said that it will not review a case involving the online sales tax collection that brick-and-mortar retailers argue puts them at a disadvantage to online merchants. New York and other states argue that when e-tailers use affiliates, or people and companies that refer business to the site in exchange for a commission, those affiliates should be considered as a physical presence.
For more see:
-This Wall Street Journal article
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