We are in a new era.
Beginning Sunday, Texans will see state and local sales taxes show up on their taxable Amazon purchases — the result of a deal with the state comptroller’s office that resolved the e-commerce giant’s past tax liabilities with the state in exchange for the sales tax collections, the creation of 2,500 jobs and a pledge of $200 million in capital investment in the state.
For customers, little will change other than prices. Amazon’s order summary already includes a line that reads “Estimated tax to be collected.” Come Sunday, that line often will be followed by something other than $0.00. The company’s systems will automatically calculate and add the proper state and local levies.
“Amazon customers in Texas will see the appropriate sales taxes applied to their order when they proceed to check out,” a company spokesman wrote in an email.
With the change, customers will actually have to pay the taxes they owe on their purchases through Amazon.com. Technically, these online buys were always subject to state and local sales and use taxes, although few people actually remitted those levies and the state rarely pursued them.
Now Amazon will collect them and, like other retailers around the state, turn them over to the comptroller’s office by the 20th of the following month.
The company will begin collecting sales tax for most of the other states in 2013 or 2014.
“Certainly of the states that managed to pressure Amazon into collecting their taxes, Texas is really the second big state, after New York,” said Michael Mazerov, senior fellow of the State Fiscal Project at the Center on Budget and Policy Priorities in Washington.
“But it’s just another step in the process,” Mazerov said. “A number of states have managed to pressure the company into collecting their sales tax. Eventually, Amazon will be collecting in a very large number of states.”
In fact, the company has thrown its support behind a federal bill — called the Marketplace Fairness Act — that would open the door for sales and use tax collections in every state. Brick-and-mortar retailers and a host of retail associations have pushed for such a law to help “level the playing field” with online retailers, most of which don’t yet collect sales taxes on purchases.
“Our hope is that eventually all online retailers will be collecting” sales taxes, said Stephanie Gibson, vice president for government affairs at the Texas Retailers Association. “We want to keep that money in our state because it supports our children and grandchildren.”
See here for some background. This is how it should be. There’s no reason to make a distinction between online sales and in-store sales. States and cities need the revenue, which supports things that online retailers need, too – streets, schools, utilities, and so on. There’s still the chance of a legal challenge to the deal Amazon struck with the state, but so far so good. This is and will be a good thing for Texas, and ultimately for the other states as well.