Holiday shopping season is in full swing. Hanukkah has started but you still have time to get gifts sent with 2-day shipping. Christmas is weeks away but for many is just around the corner. Where are you going to do all your shopping? I hate shopping, I hate stores, I generally don’t even like people. Amazon.com is the place for me.
And it’s the place for many others too. And for good reason. It’s hard to find examples of things you can find for cheaper in a store than on Amazon. And Amazon comes with another significant advantage, sales tax. Or lack thereof.
Tax law is a funny thing. It’s funny because it’s so confusing no one has a real grasp on everything. But like most laws it struggles to keep up with the times, and tax law has not kept up with the internet. Case in point: Amazon.
When most of us go to make a purchase at Amazon.com we don’t pay a sales tax. And why is this? Because tax law states you must have operations within the state the customer is purchasing from in order to charge a sales tax. Most states theoretically got around this by requiring the purchaser to report their purchases when they file taxes. How many of us do that? Not many I assume since it’s impossible to enforce.
Amazon and other online retailers skirt around paying taxes by avoiding operations in certain states. If they don’t do anything in Virginia, then Virginians don’t pay taxes when they purchase things online.
Depending on where you live and your sales tax, this equates to a savings of up to 10% on all your purchases. Many brick and mortar retailers find this unfair. If I were a retailer I’d probably feel the same way. So can’t states just insist that Amazon charge and pay those taxes? Yes, but it’s still not easy to enforce. So enjoy your free discount on Amazon, I doubt it’s going to be around forever. The rules eventually do catch up.
Read more about the sales tax issue and other ways Amazon avoids taxes at Slate.