US Amazon collects Sales Tax in new state

Sun 26th Oct 2014

Amazon has added Maryland to the list of states for which is collects US Sales Tax. The new tax charge on sales to local residents using amazon.com started on 1 October 2014.

Under US sales tax rules, out-of-state internet retailers are generally not liable to collect local Sales Tax. This has given them an inherrant advantage over in-state online and traditional bricks and mortar stores.

Amazon has long benefited from this will just a few distribution centres able to ship across the US. However, as it has moved to same day delivery, this has required the establishment of distribution warehouses in most states, which triggers a taxing nexus / permanent establishment.  Amazon’s decision to open a warehouse in Maryland has prompted this decision to commence levying Sales Tax.

Since is started to charge Sales Tax in many US states, the annual tax raised has now reached an estimated $4bn per annum.

Aside from local fulfillment centre issue, Amazon may also be concerned about attempt to change US law to more freely allow states to tax out-of-state retailers.