Starting September 15 Californians and Pennsylvanians will have to start paying sales tax on Amazon purchases
Listen up Amazon junkies. Starting September 15, Amazon purchases are about to get a whole lot more expensive for customers living in California and Pennsylvania. That’s because Amazon has agreed to start collecting sales tax for these two states.
This means that you better bulk up on online goods now if you want to save money.
For shoppers in these states, sales tax amounts to no inconsiderable sum. Californians pay somewhere in the neighborhood of 7.25% – 9.75% of sales tax on purchases. Pennsylvania residents, in contrast pay about 8% in sales tax.
One of Amazon’s great advantages over its brick and mortar competitors used to be its lack of sales tax, which made its goods considerably cheaper. It used to pay sales tax only in the states where it had a physical presence, such as a distribution warehouse. But over the last few years, the trend has been a new willingness on the part of Amazon to cut deals with states and start collecting sales tax.
Already the online retail giant collects sales tax in Kansas, Kentucky, New York, North Dakota, Texas, and Washington and has deals to start collecting sales tax in a number of other states over the next few years, including
- California and Pennsylvania – September 15, 2012
- New Jersey – July 2013
- Virginia – September 2013
- Indiana, Nevada, and Tennessee – January 2014
- South Carolina – January 2016
The National Conference of State Legislatures estimates that states lose about $23 billion in sales tax every year, $11.5 billion of it from online purchases.
For many years it was Amazon’s policy to resist paying sales tax, which they did on the basis that they did not have a physical presence in the vast majority of states.
In recent years the tide has turned against Amazon. Recognizing that paying sales tax is something of an inevitability at this point, the company has changed its tactics, making deals with individual states (as it did with California) and even pushing for a national sales tax standard.
The company now hopes to gain an edge over its competitors by speeding up delivery, even offering same-day delivery for customers living in major metropolitan areas. This necessitates expanding their network of warehouses which would force them to pay sales tax anyway.
So shop on, you cheapskates, for a little bit more at least.
Photo via sⓘndy° on Flickr.
