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Amazon relents on Texas and Nevada sales tax collections

April 29, 2012

Amazon, after fighting and/or bribing states to keep from collecting sales taxes, in one week has surrendered to two state tax collectors.

On April 23, the Seattle-based giant online retailer and Nevada reached an agreement that would have Amazon collecting sales taxes from Silver State purchasers on Jan. 1, 2014, or sooner if federal online sales tax legislation is enacted before then.

Four days later, Amazon came to state sales tax collection terms with Texas, which had assessed the online company a $269 million bill.

Texas nexus issues: The Texas Comptroller's office said that money represented uncollected taxes Amazon should have collected on sales from 2005 to 2009.

The Lone Star State revenue office had argued that Amazon's distribution center in Irving, which the company subsequently closed, constituted a physical presence in the state, thereby entitling Texas to collect sales taxes based on the Supreme Court's 1992 Quill ruling.

Now, however, the issue is moot.

Amazon's past tax bill is settled by the coming tax collections. The company also plans to create at least 2,500 jobs and invest at least $200 million in Texas facilities over the next four years.

Faster Texas tax collection pace: Amazon's Lone Star State agreement has a much quicker tax collection date that its deal with Nevada.

The company will start collecting and remitting Texas' 6.25 percent sales tax on July 1.

6-point-2-5 percent Texas sales tax Amazon

That's right, Amazon customers in the Lone Star State. Your bills will be bigger in just about two months.

That's why the state's sales tax rate is this week's By the Numbers figure.

This summer, Texas will become the sixth state in which Amazon collects sales tax.

It already collects sales tax on customers in Kansas, Kentucky, New York, North Dakota and Washington.

Federal sales tax legislation pending: The Texas and Nevada deals also highlight the two states' and Amazon's support of the pending online sales tax legislation.

Support of such Congressional action also was key in the deal Amazon cut earlier this year with California.

In that state's case, Amazon (and all other online and remote sellers) will start collecting Golden State sales tax this Sept. 15 if Uncle Sam has not enacted a federal online tax measure by then.

It looks like the California deal will kick in this fall.

The Main Street Fairness Act in the Senate and the Marketplace Equity Act in the House have bipartisan Congressional support.

The bills would streamline the more than 7,500 sales tax jurisdictions nationwide and give them options by which to collect an estimated $23 billion a year in sales taxes from online and catalog purchases.

But despite support on Capitol Hill and state tax offices across the country, as well as from lawmakers' brick-and-mortar constituents, passage of a federal measure affecting state sales tax collection is not a sure thing, especially not in an election year where Congress is otherwise distracted.

Eventually, though, shoppers had better start preparing to pay sales tax on all their purchases, regardless of how they buy them.

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • That is going to be a big blow to some customers like me who really enjoyed shopping on Amazon because of the tax break. I am still going to keep shopping there of course….I just need to work the higher cost into my budget. I wonder if many people will stop ordering online when the new rule comes into effect.

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