has been battling state after state in an effort to avoid sales tax collection,
but a recent bill by Senator Dick Durbin (D-Ill.) is
changing Amazon's mind as the federal action gains increased support.
Amazon, the largest online retailer with over 90 million registered buyers, has
been pressured to collect sales taxes by U.S. states in the recent past due to
large state budget deficits, and brick-and-mortar stores complaining about unfair competition. According to University of
Tennessee studies, states are expected to lose $10 billion in uncollected
online sales taxes this year, and another $11.4 billion next year. With states
already dealing with weak economies, this additional loss in taxes hurts, and
the potential gain could lift them out of the red.
The online retail market was worth $165 billion last year, and some U.S. states
did all they could to get a piece of that. For instance, Texas State
Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes, and California state Governor Jerry Brown
recently signed a bill to enforce online sales tax. Both instances caused
Amazon to cut ties with in-state affiliates and split, noting that a 1992
Supreme Court ruling excuses the online retailer from
collecting taxes in states that do not have company employees or warehouses
operating within its borders.
Amazon has said that it would change its tune if the problem was "fixed
properly" with federal legislation. Durbin answered this call a couple of
months ago when he introduced the Main Street Fairness Act, which requires all
businesses (online and brick-and-mortar alike) to collect sale tax "in the
state where the consumer resides." His aim is to give states the authority
to require retailers to collect sales taxes already owed, and will not impose
The bill is now gaining momentum as it attracts more supporters. Last Friday, the
National Governors Association and the National Retail Federation gave the bill
As promised, Amazon has cooperated with the new measure. All the company has
asked for is a "national framework" for remote sales taxes, and Paul
Misener, Amazon's vice president for global public policy, has written a letter
to Durbin pledging to cooperate.
Analysts at William Blair & Co. have said that Amazon's prices are an
average of 11 percent below store prices of half of over 2,000 items for sale
at 24 retailers. If Amazon were to begin collecting sales taxes, this 11
percent would drop to the single-digits.