By Craig Gipson and Brian Flagler
The question of how to effectively tax online sales is still far from receiving a final answer but 2017 has been a year of new ideas. As many as eight states and two bills in the House of Representatives aim to modify tax policies affecting virtual retailers and their brick and mortar counterparts. However, the legal logjam has not stopped some companies from formulating their own strategies.
As of April 1, Amazon now collects sales tax in every state that levies one. Toward the end of 2016, Amazon began voluntarily collecting sales tax in Washington D.C. and continued to add taxing jurisdictions through March. The April move means Amazon now collects the tax in 45 states; Alaska, Delaware, Oregon, Montana, and New Hampshire have no statewide sales tax.
Despite Amazon’s cooperation with states, brick and mortar retailers are still pushing for federal and state solutions. With many online sellers still refusing to collect sales tax (many of them third party sellers through Amazon), the president of one state retailers association told Bloomberg News that Amazon is just one piece of the puzzle. On April 27, the House introduced a bipartisan bill aiming to make the collection of sales tax uniform across all online retailers. The House failed to pass a similar measure which the Senate approved in 2013.
Another bill proposed in the House of Representatives aims to curb the growing momentum of states taking the matter into their own hands. Indiana and Wyoming passed recent legislation requiring the collection of sales tax by online sellers regardless of their physical location. South Carolina passed a bill in February forcing out-of-state sellers to register with the state Department of Revenue. Other states are considering similar measures despite the 1992 Supreme Court decision establishing that states may only collect sales tax from companies that have a physical presence in that state (theoretically, customers are still supposed to pay the tax to their home states). ECPA will continue to track these developments as a federal solution or state tax law patchwork may impact online commerce for the publishing industry.
