By Amy Gilroy
Mor
e states are trying to force Amazon (NASDAQ:AMZN) and other online retailers to charge sales taxes as a result of the recession and tighter state budgets.
Five states have introduced legislation that would affect Amazon’s sales tax collections in those states, namely California, Hawaii, New Mexico, Minnesota and Vermont. And Illinois just passed a law requiring online retailers to collect sales taxes in some cases.
You see a state can’t require a retailer to collect a sales tax unless the dealer has a physical presence in that state. The Supreme Court deemed it so in 1992, well before the online sales boom. But states are getting in the back door by requiring Amazon and other online sites to collect taxes on sales made through affiliate sites that drive traffic to Amazon or Overstock.com (NASDAQ:OSTK), etc. (if the affiliates are based in the home state).
The bigger point here is that there’s a groundswell of political will among states to force online retailers to collect sales taxes, and this may eventually compel Congress to act and change the rules. Many believe this would level the playing field between brick and mortar stores and online retailers.
“The ideal solution would be for Congress to act or the Supreme court to revisit the matter. That’s more likely to happen if states force the issue by acting first,” said Minneapolis StarTribune columnist Eric Wieffering.
Amy Gilroy is the Editor of CEoutlook.
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