Tag Archives: Amazon

Amazon sales down in states where taxes are collected

Amazon.com has seen its sales fall in state, including Tennessee, where it has begun collecting taxes on purchases, according to a study reported upon by the Chattanooga TFP.

Tennessee joined 19 other states this year in requiring Amazon to collect sales taxes on what it sells because the company operates distribution facilities in the state, including its giant warehouses in Chattanooga and Charleston, Tenn. Amazon will begin collecting sales taxes on items purchased by Florida residents on Thursday after the company expanded its facilities in the Sunshine State last year.

A new study suggests that requiring Amazon to collect the sales tax is likely to limit Amazon sales and push some buyers to other online merchants that don’t have a presence in Tennessee and aren’t required to collect sales taxes.

Researchers at Ohio State University looked at purchases by 245,000 people in five states that began permanent collection of taxes on Amazon purchases between 2012 and 2013 — California, New Jersey, Pennsylvania, Texas and Virginia. The study found that the sales tax reduced Amazon sales overall by 9.5 percent. For purchases of $300 or more, Amazon sales plunged by 23.8 percent after the company began collecting the tax.

“Households substitute Amazon with other retailers, either online retailers who are exempt from collecting the sales tax or in-state retailers (online and brick-and-mortar),” doctoral student Brian Baugh wrote in the 39-page study.

While Amazon sales dropped, big-ticket sales of other online merchants who still don’t have to collect sales taxes on their sales jumped by more than 60 percent. The study found that sales at local brick-and-mortar stores rose 6.5 percent on items valued at $300 or more.

Desha Grubb Maples said Tuesday she has quit buying from Amazon since the new tax began in January, in favor of other online merchants not required to collect the tax because they don’t operate in Tennessee.

Despite such losses, however, Amazon.com still grew its sales by 20 percent in the first quarter of 2014. How did the online retailer do it?
Well, not everything Amazon peddles on the Amazon Marketplace website is covered by the new “Amazon tax.” Amazon.com’s program permits third-party sellers to advertise their goods on its website — and even to outsource the billing, warehousing and delivery to Amazon.

But because the items are not technically sold by Amazon, such items are not subject to requiring buyers to pay sales tax at the time of the purchase. As a result, Amazon still doesn’t have to collect tax on much, if not most, of the sales it makes through its website.

Amazon sales tax money coming soon; Gov says it’s ‘a big deal’

Starting in January, Amazon will begin charging Tennessee customers sales tax for the first time under a deal worked out between the online retail giant, Gov. Bill Haslam and other state officials a couple of years ago. WPLN reports that Amazon has been posting huge sales figures in recent quarters, the estimates for what the company will bring Tennessee is a little less eye-popping.

State government has been missing out on an estimated $400 million a year in sales tax revenue from online purchases. But University of Tennessee economist Bill Fox says only a fraction of the missing money is a result of the industry leader.

“So as important as Amazon is, there are a lot of other e-commerce sales out there.”

In fact, many transactions made through Amazon.com are really with some of the – according to Fox’s research – 2 million mom-and-pop web retailers who use the site to sell their goods.

Those firms and perhaps millions of others still won’t have to charge taxes if they’re located outside the state.

State accountants estimated in 2012 Tennessee was missing roughly $23 million in sales tax from Amazon purchases. That figure presumably has gone up as the company’s sales have grown by double digits in many quarters.

Amazon has been operating under an exemption negotiated after it started building warehouses in Tennessee several years ago. Similar arrangements with other states have been expiring in recent months.

…Governor Bill Haslam says Amazon tax revenue will make a big difference, as his administration writes its next budget.

“Obviously, it’s a big deal, we have a tight budget and I think a lot of people see that as a new tax. But what I try to remind a lot of people is the items being bought from Amazon, they were buying from a local store before.”

Total revenue collections for the fiscal year to date have missed their budget estimates by more than $100 million. Despite that, the Governor is defending cuts in food and estate taxes enacted by the General Assembly.

Obama to Visit Amazon at Chattanooga Next Week

Barack Obama will visit Chattanooga on Tuesday for the first time as president to pitch his vision of helping expand middle-class jobs, reports the Chattanooga TFP.
Obama will tour the 1 million-square-foot distribution center Amazon opened in the Enterprise Industrial Park two years ago. The fulfillment center in Chattanooga employs 1,800 full-time workers and is among five facilities Amazon has built in Tennessee since 2011 that collectively have added more than 5,000 full-time and seasonal jobs in the Volunteer State — the biggest job addition in the state by a private company in the past decade.
Obama will use the Amazon expansion to help highlight what he says is an improving economy but one that needs to do more to help boost the middle class.
In a speech Wednesday in Galesburg, Ill., Obama cast himself as the champion for middle-class Americans struggling to make ends meet. He chided Washington for having “taken its eye off the ball” and declared that the economy would be the “highest priority” of his second term.
White House officials said Tuesday’s speech will focus on manufacturing and high wage jobs for durable economic growth. The president is expected to promote his budget proposals to jumpstart private sector jobs with more infrastructure and education spending in the federal budget.
But Republicans object to what they see as too many government regulations and too much deficit spending by the Obama administration, which they say has failed to restore the U.S. economy. Nearly three years after the end of the Great Recession, the U.S. unemployment rate remains at a stubbornly high 7.6 percent.
“President Obama has presided over the worst economic recovery since the Great Depression, so a visit to a right-to-work state like Tennessee to learn a thing or two in how to get things done should be expected,” Tennessee Republican Party Chairman Chris Devaney said. “Thanks to Republicans, we’ve cut taxes, balanced our budget, and have the lowest debt of any state in the union.”

Haslam Campaign, Others Failed to Pay Sales Tax on Amazon Purchases

Gov. Bill Haslam’s 2010 campaign quietly paid $434 in state sales taxes on more than $4,000 in purchases made from Amazon.com two weeks ago after The Tennessean inquired about failure to pay while researching a story that appeared Sunday.
The payment also came after Haslam’s July testimony before Congress in support of a law requiring Internet companies to collect state taxes… and after Haslam cut a deal with Amazon in 2011 on sales tax collections.
The newspaper found several state political campaigns that did not pay sales tax on Amazon purchases while reporting just one that did (Sen. Roy Herron, D-Dresden).
After fielding questions from The Tennessean about the purchases two weeks ago, the campaign promptly paid the taxes, spokesman Dave Smith said.
“Since this issue came to our attention, the taxes have been paid,” Smith said in an email. “It was inadvertently overlooked.”
Smith declined to elaborate further.
During its most recent fiscal year that ended in June, the Department of Revenue collected about $4.7 million in revenue from “consumer use tax” — which is levied on all online, catalog and purchases of untaxed items from outside the state, said department spokesman Billy Trout.
Voluntary filings — 8,766 to be exact — accounted for just more than $3 million of that revenue. Those filings last year jumped nearly fivefold from the 1,795 returns received in the previous fiscal year.
“Quite honestly, it’s a continual issue for us,” Trout said. “We know there’s a lot of people out there who don’t understand it and don’t realize it.”
Trout said he suspected the Amazon email notices contributed to the increase. The company began sending notices in April to Tennessee residents for purchases made in 2011.

Haslam Calls for Congress to Allow States Online Sales Tax Collection

Gov. Bill Haslam told a congressional committee Tuesday that it’s time for Congress to allow states to collect sales taxes from out-of-state catalog and online retailers on purchases by in-state residents, reports the Commercial Appeal.
The governor said that would increase Tennessee tax revenue by $400 million per year, which he said the state could use to cut taxes and spend on infrastructure and higher education.
“Let me be clear: I am a Republican governor that does not believe in increasing taxes. Tennessee is a low tax state to begin with, and we’ve been able to cut taxes over the past two years. This discussion isn’t about raising taxes or adding new taxes. This discussion is about states having the flexibility and authority to collect taxes that are already owed by their own in-state residents. This discussion also is about leveling the playing field for local brick and mortar businesses in communities across Tennessee and across the country,” Haslam told the U.S. House Judiciary Committee.
The committee is hearing testimony on HR 3179, the “Marketplace Equity Act,” which would enable states to collect sales tax on the purchases of residents of their own states from out-of-state online and mail-order retailers.
…Haslam was introduced to the committee by U.S. Rep. Steve Cohen, D-Memphis, who said Haslam “is part of a mainstream Republican tradition in Tennessee that goes back through Howard Baker, Lamar Alexander and Bob Corker.”

Note: The prepared text of the governor’s remarks is below.

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Haslam To Pitch Online Sales Tax Collection to U.S. House Panel

Gov. Bill Haslam will testify beforef the U.S. House Judiciary Committee on Tuesday in support of federal legislation granting states the power to make all online retailers collect sales taxes.
From the Chattanooga TFP:”
He’ll be testifying about the Marketplace Equity Act and leveling the playing field between online retailers and brick and mortar businesses,” Haslam spokesman David Smith said in an email.
Many states, including Tennessee, have been clamoring for years to persuade Congress to resolve problems arising from a 1992 U.S. Supreme Court decision. The court held that retailers were only obligated to collect sales taxes from customers in states where the companies are physically located.
…The issue has been batted back and forth for years in Congress, but it’s picking up steam. U.S. Senate Majority Leader Harry Reid, D-Nev., said just this week in a news conference it could pass the Senate, according to The Hill newspaper. U.S. Sen. Lamar Alexander, R-Tenn., a former governor, is one of the primary Senate sponsors.
The bill has the support of Internet retail giant Amazon, which has built distribution centers in Tennessee, including two near Chattanooga and Cleveland.
Amazon last year began striking deals with Republican governors or legislatures in several states, including Tennessee, to begin collecting sales taxes where the company has built distribution centers.

Amazon Notices Bring Increase in Sales Tax Collections

A law that requires Amazon.com to begin collecting sales tax in Tennessee doesn’t take effect until 2014, but one provision that became effective immediately appears to be having some effect, reports Andy Sher.
Consumer use tax collections in April were $571,197, an increase of $342,964 or 108.1 percent from April 2011. That appears to be directly related to a provision in the law that requires Amazon to begin notifying its Tennessee customers immediately that sales tax payments are already required by state law.
“It’s reasonable to think that April’s increase in consumer use tax … is due to increased attention to the subject via the notices and the increased media attention,” Revenue Department Billy Trout said.
Assistant House Republican Leader Kevin Brooks, R-Cleveland, handled the Haslam administration’s Amazon bill.
“This was the agreement that was reached by all parties to allow Amazon.com to keep 3,500 jobs in our state,” Brooks said. “This was a jobs bill.”

Amazon Sending ‘Pay-your-taxes’ Notices

CHATTANOOGA, Tenn. (AP) — Online retailer Amazon.com has begun emailing Tennessee customers, telling them they might owe taxes on their purchases.
The Chattanooga Times Free Press (http://bit.ly/I681dj ) reported the notification follows the signing of a law about a month ago by Gov. Bill Haslam. The law requires Amazon to begin collecting sales tax on items sold to Tennessee residents, beginning in 2014.
In the interim, Tennessee consumers are liable for a “consumer use” tax that applies to goods purchased online from a company that doesn’t collect the sales tax.
The notice from the company informs customers they might owe the tax and details the various divisions of Amazon.com from which goods were purchased. It also provides a link to the Tennessee Department of Revenue’s consumer use tax return website, which explains the consumer use tax, who should file and how.

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Lamar Says a State Income Tax is Coming (well, maybe)

News release from Sen. Lamar Alexander:
WASHINGTON – In a speech today on the floor of the United States Senate, U.S. Senator Lamar Alexander (R-Tenn.) called on his colleagues to pass the Marketplace Fairness Act, a bill introduced with Senators Mike Enzi (R-Wy.) and Richard Durbin (D-Ill.), and “close a 20-year loophole that distorts the American marketplace by picking winners and losers, by subsidizing some businesses at the expense of other businesses and subsidizing some taxpayers at the expense of other taxpayers.”
Alexander said: “In Tennessee, where we don’t have a state income tax, we want to avoid one. ‘State income tax’ are probably the three worst words in our vocabulary, and collecting tax on sales from everybody who owes it could not only reduce our sales tax but help us avoid a state income tax.

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Bill Implementing Amazon Deal Sails Through House 97-0

News release from House Republican Caucus:
NASHVILLE, Tenn. – In an effort to codify the agreement reached last year between Governor Bill Haslam and officials from Amazon.com Inc., Representative Kevin Brooks (R–Cleveland) and Representative Eric Watson (R–Cleveland) pushed legislation through the House today that will help Tennessee develop and maintain 3,500 jobs in the State.
The bill, House Bill 2370, is a Haslam Administration bill and was made a top priority by House Majority Leader Gerald McCormick (R–Chattanooga). Leader McCormick asked Brooks, who also serves as Assistant Majority Leader, to usher the legislation through the General Assembly.
HB 2370 simply establishes requirements for determining whether certain business affiliates have a physical presence in this State sufficient to establish nexus for sales and use tax purposes. Nexus is a legal term referring to connection or jurisdiction within a State.
In the case of Amazon, this legislation will ensure the online retail giant will pay Tennessee sales taxes if a national online sales tax law is not passed by the federal government by 2014. Under the bill, the new Amazon fulfillment centers located across the State will meet the requirement for establishing nexus in Tennessee.
“Simply put, this is a jobs bill for Tennessee,” stated Brooks. “It ensures a partner like Amazon and similar companies will participate in our system and it keeps all businesses on a level playing field. Most importantly, it ensures 3,500 positions are going to be created and remain here in Tennessee. I look forward to working with my colleagues in the Senate to get this to the Governor’s desk as soon as possible.”
McCormick added, “Representative Brooks has done a fine job getting this important bill through the House. Representative Watson has consistently fought for Amazon jobs. Obviously, it’s a priority for Governor Haslam and our Republican Majority. I believe it is vitally important we have consistency across the State and this bill does just that.”