In a bid to build a diverse physical network of services, U.S-based e-commerce major Amazon was lenient with its sales tax concerns until date. However, with the growth of the company over the past few years, it has decided to move in line with government taxation policies. Leveling the playing field, Amazon will start collecting sales tax from merchants of Hawaii, Idaho, Maine, and New Mexico, starting from April 1st this year.
With the addition of four mentioned states, Amazon will impose a sales tax on all 45 states where the company is currently serving in the United States. This marks the end of tax-free shopping era from the next month nationwide. However, the remaining five states — Alaska, Delaware, Montana, New Hampshire and Oregon, absent from the list do not levy any kind of sales tax. This development was first reported by CNBC.
The news comes following the addition of ten states under its sales tax spectrum, effective from March 1st recently. In the beginning of February 2017, Amazon announced the list of jurisdictions from which it collects sales tax and named Iowa, Louisiana, Mississippi, Missouri, Nebraska, Rhode Island, South Dakota, Utah, Vermont and Wyoming for tax collection.
The amount of tax charged on your order will depend upon many factors including the identity of the seller, type of item purchased, and destination of the shipment. The tax will vary depending on such factors and hence the amount appearing on your order as ‘Estimated Tax’ may differ from the sales taxes ultimately charged. If an e-tailer skips the process, the authorities collect the tax from consumers via a ‘Use tax’ – a sales tax imposed on tangible personal property and taxable services purchased for consumption or storage purposes.
Previously, the company employed various deals with state governments to arrange for collection of taxes. The recent decision presents an adorned social image for Amazon but it may hamper its retailing business advantageous over brick-and-mortar stores –offering tax applied goods. However, on the bright side, the increased revenue will help the administration and lawmakers in making further reductions to income tax of people.
