VAT News

USA-Amazon to collect taxes in certain states

As the e-commerce world continues to boom, this has provided authorities with the opportunity to collect additional tax revenue, however to date, much of this revenue in the US is being lost. It is estimated that potential tax from Amazon sales in the US in the sum of $2bn per year is not being collected.

Under current rules in the US, sellers must generally only remit sales tax where they have a nexus in the relevant state. Until now, Amazon have left the responsibility for collecting any tax due to the seller themselves, however some US states are now looking to make changes to maximise tax revenues.

Leading the way is the state of Washington which will implement legislation in January 2018 with the effect that platforms such as Amazon will now be responsible for collecting sales tax on supplies made to consumers in the state. The requirement for the seller to have a nexus in the state will no longer apply, putting out of state suppliers on an equal footing with in state suppliers.

With Minnesota set to implement similar legislation in 2019, and Rhode Island also said to be considering similar changes, it appears that many US states will now seek to explore this a significant source of tax revenue.

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