It used to be that you’d make a purchase on Amazon and you wouldn’t pay sales tax on your purchase. Times have changed, and now there is a seemingly infinite number of twisted and complex hoops the retail giant (and marketplace sellers) have to jump through.
Here’s Five Fast Facts on Amazon and Sales Tax:
- 🛍️ Not My Job - Amazon does not charge sales tax. Only governments have the ability to levy taxes. Amazon does have to comply with a ridonkulous amount of tax jurisdictions. And they have to devote significant resources to make it happen.
- 📪 Rule of Law - Sales tax for online purchases is still fairly new. State laws have been enacted since 2011 that requires all online retailers to comply with their sales taxes. A 2018 Supreme Court case was the end of the practice altogether.
- 🗺️ State by State - The rules for sales tax vary by state and that can be a pretty nasty web to untangle. In Colorado, Amazon purchases require a 2.9% sales tax. Illinois charges 6.25% plus whatever cities charge on top of that, which is usually 1%.
- 📦 All or None - It gets even crazier: Delaware, Montana, New Hampshire, and Oregon do not collect state sales tax at all. On the other hand, Colorado, Georgia, and Texas all charge sales tax on shipping costs, too!
- 🧾 Sellers’ Burden - Amazon sellers aren’t exempt. They have to pay sales tax, too! The seller can do it themselves or let Amazon do it for a fee.
🔥Bottom line: It’s not all profit for the Bezos train after all. Consider how confusing your income taxes are and then amplify that to a national level. Running a business is difficult but running a small business on Amazon has to be even more difficult.
What do you think of the tax codes?
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