The debate, boiled down simply, is should Amazon be required to collect sales taxes in states and what defines a physical presence?
While this has been an ongoing dispute, it has recently escalated as states look to recover deficits coming out of the recession. One way to do this would be through sales taxes.
In response to these laws, Amazon has threatened, and in some cases, discontinued its affiliate relationships in several states and is reportedly planning on taking legal action against states that have recently passed such legislation.In the past, Amazon has been protected by a 1992 Supreme Court ruling (Quill Corporation v. North Dakota) that prohibits a state from forcing a business to collect sales tax unless it has physical stores in the state. While taxpayers in most states are required to pay the tax directly to the government, few actually do. But now several states are seeking to get around these restrictions by passing laws that expand the definition of physical presence. The target has been on those e-commerce sites that work with affiliates. Affiliates are partner sites that earn commissions by advertising or linking to an online retailer's merchandise. Currently, Amazon collects sales tax in five states -- Kansas, Kentucky, New York, North Dakota and Washington -- the only markets where it has stores or offices. But if other local governments have their way, this could soon change. Here's a state-by- state look at how Amazon is handling the sales tax debacle...
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV