#rsrh What the Indiana/Amazon.com deal means – and doesn’t mean.

Came across this article via Hot Air on Indiana and Amazon.com coming to an agreement on collecting sales tax – short version; Amazon.com will start being liable for collecting sales tax in Indiana in 2014, or when federal legislation is passed, and not a moment before – and I was struck by the lack of information in it.  Specifically, on why Amazon.com was going along with this in the first place.  Generally speaking, Amazon.com‘s response to having individual states (they’re actually supportive of a federal program to straighten out state sales tax schemes) try to force it to collect sales tax is to refuse: it has a Supreme Court decision (Quill Corp v. North Dakota) that has established that companies do not need to collect states sales tax in states where they do not have a physical presence, and recent state legislative attempts to define ‘local online affiliates’ as ‘physical presence’ simply results in Amazon.com ending its affiliate programs in those states*.

So I looked it up… and it turns out that Amazon.com has a legitimate physical presence in Indiana (distribution centers); it had negotiated an agreement in 2007 with the state government to not be liable for collecting sales tax anyway.  Somebody sued over that, and Amazon.com has apparently decided that it might not win that particular lawsuit… so it made a deal where it will start being liable for sales tax collection a couple of years down the road.  All of which probably should have been in the story from the beginning, huh?

I shouldn’t complain: the inability of supposedly trained professionals to actually report the news has been a great personal boon to me and mine.  But it still bemuses, sometimes.

Moe Lane

Full disclosure: I am an Amazon.com Affiliate for Maryland.

*Except in New York, where they’re still fighting it in the courts.


  • Skip says:

    I wonder if Amazon’s just going to use the 2 years to close the distribution centers? Wouldn’t surprise me.

  • robinintn says:

    If Tennessee is any indication, that’s exactly what they’ll do Skip. Amazon has distribution center(s?) here, and had an agreement with the previous administration that taxes would not be collected. When the new governor was elected, there was some talk of ending that agreement, which was quickly quashed when Amazon made it abundantly clear that it would be no trouble at all to up and move its in-state presence. Which is great for us, the state’s citizens, who really shouldn’t be required to underwrite the failing brick and mortar business models. Can’t compete? Tough.

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