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I was reading about all the places amazon will not be putting disturbution centers because the states want them to collect sales tax. I wonder what the legalities and such are? Last I was explained the tax law on this matter it only pertained to businesses with a physical storefront in the state in question. if this were to stick does it mean that companies need to collect sales tax in every state the package stops in? I mean I have seen that some online companies collect sales tax only in the state they are headquartered, so is the flavor of the law now that if you have any prescense in a state you are obliged/required to collect sales tax on items in that state?

EDIT: apperantly almost universally yes in every state a company has any prescense they are legally obliged to collect, if they dont the consumer is required by law to pay something called the "use tax" on everything they buy that doesnt at the standard tax rate. ie where I live if I buy 1000$ worth of stuff from amazon I owe minnesota 71.25 in use tax.... O_O

Well, there's a tax law in Colorado that is currently being taken to court that we have to pay sales tax on every online purchase regardless of where the storefront is. Haven't paid it because there's an injunction while it's in dispute, but it is kind of irritating to have to deal with when the online vendor doesn't collect it and we have to pay it seperately at tax time. I'm not really sure what my opinion on it is to be honest.

Living in Washington I always have to pay tax on items sold directly from Amazon so part of me feels bitter and wants everyone else to have to as well. But the sensible somewhat normal part of my brain says no.

Changing nature of retail is something that state tax agencies are trying to catch up with and contend with. I work retail, and through our company website we collect sales tax according to the location of the purchaser of goods. To have a company like Amazon, who has many distribution centers across the country, try to say "We don't have to collect here because this center is on for fulfillment" is really bogus. Yes, I think that they should collect tax from the purchaser in states in which they have a physical presence.

I don't really see how it will break down, but, yes there should be a sales tax for items bought online. It will be a colossal headache for everyone involved. But why should online stores take money away from your state and local governments?

sale tax is a major revenue for most states. A "store" like Amazon is selling goods that the STATES can't get a piece of pie for. Personally, I think to make it even, just pay the sales tax to the state you are shipping the product to. Then Amazon will send the tax they gather to that state.

Do I want to pay sales tax? heck no, but it is unavoidable since more and more people are doing business online and government need their tax dollars.

Most states have sales tax (five don't: Alaska, Oregon, Montana, New Hampshire, Delaware). Their sales tax applies to ANY purchase their citizens make, regardless of the place of sale. It's a little more complicated sometimes, for instance if you bought it out of state, they may charge a "use" tax, since the sale wasn't in their jurisdiction, but in general it's the same essential thing - you must pay a tax if you spend money on something. Generally post-sale taxes are collected at the same time as income tax returns.

The states hand out business agreements with businesses and that agreement requires the business to collect sales or use tax at the time of sale. Thus the state can force business within the state to collect the relevant sales tax at the time of sale.

However, the state cannot force a business outside the state to collect sales tax. So for many, many years, mail order companies reaped the benefits of being able to sell expensive items to customers who wanted to dodge sales tax. If the shipping cost was lower than the tax, it was win-win for the customer and company, but the state lost on sales tax the customer should have declared at tax time.

States, for many years, didn't feel it was a big enough source of income to try to go after (although some did attempt to do it).

However, online commerce is turning into a big piece of the pie.

The states can audit people and if they didn't declare their sales and use taxes properly (yes, you generally have to pay sales tax on item you bought from a friend - it doesn't have to be a business).

But more and more states are entering into reciprocity agreements with each other. For instance, Ohio requires businesses that sell to Michigan residents to collect Michigan sales tax and send it to Michigan, and Michigan requires Michigan businesses to do the same for Ohio residents.

Ohio can't make Michigan businesses collect sales tax, but Michigan can, and therefore this reciprocity agreement forces businesses in both states to comply with tax laws in another state. These reciprocity agreements are getting larger and larger and gaining steam - I think Michigan has such agreements with 5 or so nearby states.

Some internet retailers are being pro-active about it and simply charging sales tax for everyone, such as Dell. Others use it as a competitive advantage and try to give items to their customers with the "tax" discount, even though their customers are still liable for it.

What Amazon and others are trying to do is set up shell corporations to manage their warehouses. So, if Amazon sells to me in Michigan from the "Amazing Fulfillment Warehouse Company Number 43", which technically is a separate company from Amazon, and he warehouse is located in Michigan, does Amazon - which has not signed a business license with Michigan, owe sales taxes? The fulfillment warehouse is a service provider to Amazon - they didn't sell anything to me. Amazon pays them for storage, order fulfillment, and shipping, so technically the business license they signed with Michigan doesn't mean anything regarding collecting sales taxes for me.

So, legally, Amazon and many other businesses are attempting to get out of paying state sales taxes through various tricks. Technically it should be OK, since, in theory, I should be paying sales taxes to Michigan for things I buy that don't automatically charge me tax. But I don't - I'm not going to bother keeping track of all my purchases and fill out paperwork so I can send money to my state, even though I could be fined for it. It's not worth it. And most people do the same thing.

So the states craft labyrinthine tax codes and business agreements in order to make it so Amazon and other major retailers pay sales tax, so they don't have to work so hard to get it out of their citizens.

And Amazon is fighting back so they can have a competitive advantage over local businesses who do have to pay sales tax.

So, do I go to Locally Owned Joe's Diamond Emporium and put money back into the local economy, but spend an additional $30 in taxes, or do I get something from Amazon with free shipping and no taxes, but my money goes out of state?

Local businesses are at a severe disadvantage. Moreso because their customer base is smaller, their inventory is smaller, their orders to suppliers are smaller, and shipping to their location is more expensive, etc, etc, etc. They can't compete.

So is it fair or right for Amazon and others? Well, they aren't operating illegally. But it's hardly fair.