Amazon to start collecting sales tax in three new states in 2014

By Daniel S Levine,

Amazon has begun collecting sales tax in three additional states - Nevada, Tennessee and Indiana - this year. The online retail giant has fought for years to avoid collecting sales tax in as many states as possible, but it now collects sales tax in 19 states.

State officials from the three new states joining the club say that it will help generate $50 million a year, reports The Wall Street Journal.

As part of its deal with Tennessee officials, Amazon said it will build two warehouses there. The Christian Science Monitor reports that Gov. Bill Haslam said that the warehouses should create 3,500 jobs for the state.

The general rule of thumb used to be that an online retailer would only collect sales tax if the company had a physical presence within the state. However, Amazon had been successful in fighting that, until the U.S. Supreme Court decided not to rule on a New York case, in which Amazon tried to avoid charging tax there. New York State argued that since Amazon had affiliates in the state - used to help boost online traffic - that it had a foothold there and should charge tax. Amazon decided to cancel agreements with affiliates in Minnesota and Missouri just to avoid charging tax there, notes the Wall Street Journal.

In 2013, Amazon did reach a deal to bring warehouses to Florida, so sales tax will be collected there soon as well. Tax will begin being collected in 2016 for South Carolina residents.

image: Wikimedia Commons

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