Ohio becomes 25th state in which Amazon collects sales tax

June 1, 2015

Amazon has hit the halfway mark.

Today, June 1, the online retailer begins collecting sales tax on products it delivers to shoppers in Ohio. The Buckeye State is the 25th state in which Amazon collects sales taxes.

Amazon box by MikeBlogs via Flickr CC
Photo by MikeBlogs via Flickr Creative Commons

Officials estimate that Amazon's tax collection will help boost Ohio's sales tax revenue to between $150 million and $300 million annually. Before today, Ohio has had to rely on the state's online consumers to pay the tax.

The new online sales tax collection system was announced late last week, after a year of Amazon and Ohio officials hashing out the deal's details.

Ohio, Amazon benefits: In addition to getting more sales tax money, Ohio will be the home the Midwest hub of Amazon's cloud computing operations.

Amazon is expected to invest about $1 billion in two existing and one future Amazon Web Services data centers in the Columbus suburbs of Dublin, Hilliard and New Albany.

The company's overall expansion will bring around 1,000 well-paying jobs to the state over the next several years.

That, my friends, is undeniable nexus, the requirement per a 1992 Supreme Court decision (Quill v. North Dakota) that a company can't be forced to collect a state's sales tax unless the business has a physical presence, aka nexus, within the state.

In return, Amazon will get — wait for it — sales tax breaks on certain equipment purchases associated with the expansion.

25 and counting: Similar tax breaks for tax collection deals have been cut by Amazon in 24 other states.

The Seattle-based company already has been collecting sales taxes on purchases by customers in Arizona, CaliforniaConnecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

It will be collecting sales taxes in more than half of the states on Jan. 1, 2016, when South Carolina joins the list.

National effort reintroduced: Meanwhile, Congress is trying, once again, to get the Marketplace Fairness Act on the federal books.

The 2015 version of the national sales tax collection bill is basically the same as the one introduced in 2013. That earlier measure advanced more than earlier bills, getting approval by the Senate. The House, however, failed to act on the measure before the 113th Congress adjourned.

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