Amazon Shifts Tactics on Sales Taxes

Posted by Erin

Tax-free shopping on the Internet may soon come to an end, said Monica Langley in The Wall Street Journal. Republican governors in budget-strapped states, eager for revenue, are joining their Democratic colleagues by dropping their longtime opposition to collecting sales taxes on online purchases. Under pressure, Amazon, which has long relied on a 1992 court ruling that online companies don’t have to collect sales taxes if they lack a physical presence in the customer’s state, is now collecting taxes in six states, and by January 2014 will start doing so in seven more, including New Jersey, Indiana, and Virginia.

The irony is that Amazon’s capitulation on taxes could be the death knell for its offline retail rivals, said Barney Jopson in the Financial Times. The company is expanding its network of warehouses to states where it collects sales taxes, and plans to soon offer same-day delivery to millions of consumers. “If Amazon can deliver to work or home in three or four hours—and at little or no shipping cost to the consumer—then why bother with the store?” An Amazon promise of same-day delivery is “a major fear,” said New Jersey bookstore owner Rita Maggio. “I’m afraid we’ll never get back what we lost.”

- As seen in The Week
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