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Amazon Pushes Back Against Internet Sales Tax

— January 9, 2015
Internet Sales Tax Amazon
The Internet.

In recent days, the online retail giant Amazon has pushed back against a potential new Vermont Internet sales tax, barring “Vermont residents and companies from earning money by referring customers to the Amazon website” (USA Today).

USA Today also reported “Vermonters participating in the Amazon Associates program were notified by email Tuesday of their immediate termination” and that “Vermont is one of six states whose residents are ineligible for the program”.

The Amazon Associates program lets people who refer sales to the company collect a commission.  Vermont Public Radio noted Amazon “said it opposes state efforts to implement taxes on Internet click through sales and instead favors a universal federal standard.”

According to Burlington Free Press, current Vermont law allows online retailers to avoid state sales tax, a loophole that can be truly “taxing” to small businesses, and creating an “an unfair advantage for Internet sales.”

The Burlington Free Press continues:

“The Marketplace Fairness Act passed the Senate 69-27 last year, with Vermont Sens. Patrick Leahy, a Democrat, and Bernie Sanders, an independent, voting in favor. It was designed to help local retailers compete with out-of-state Internet sellers by giving states the authority to require remote retailers to collect state sales and use taxes.

The bill also would have required states to provide free software to online retailers and would have relieved retailers of liability if the software malfunctioned.

But House Speaker John Boehner, R-Ohio, said it would be too difficult for online retailers to comply and refused to bring up the bill for a vote. Anti-tax groups also oppose the bill.

Supporters of the tax say it’s not new. States with a sales tax also levy use taxes, which are legally owed on out-of-state purchases when no tax was collected at the time of purchase. But those taxes are difficult to collect because it’s now up to consumers to pay the states.

States lost an estimated $23.3 billion in 2012 in uncollected use taxes from all remote sales in 2012, according to University of Tennessee estimates cited by the National Conference of State Legislatures. Vermont lost an estimated $45 million that year, the study shows.”

In an email to Amazon Associates members, the company said “Amazon strongly supports federal legislation creating a simplified framework to uniformly resolve interstate sales tax issues” and “We are working with states, retailers, and bipartisan supporters in Congress to get legislation passed that would allow us to reopen our Associates program in Vermont.”

Several Vermont lawmakers have called Amazon’s tactics plain bullying, typical for a company its size.  This is true.  Sadly, the power to regulate online retail sales has largely lied not with energetic state legislatures, but with one of the least active US Congresses in recent history.  Hopefully this 114th US Congress will be an improvement over the 113th, and work for positive, lasting tax reform, but I’m not holding my breath.

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