Anaya Nolan
Amazon's sales tax collection has been a dynamic issue, with the company's tax behaviour coming under scrutiny in multiple countries. In the United States, Amazon's sales tax collection has evolved over the years, with the company initially collecting sales tax in only a handful of states due to the physical presence rule. However, by 2017, Amazon started collecting sales tax nationwide, with the last four states, Hawaii, Idaho, Maine, and New Mexico, added to the list. This change levelled the playing field for brick-and-mortar stores, which had long argued for expanding the sales tax to online retailers. Amazon's sales tax collection in the US continues to evolve, with some states, like Washington, taxing purchases made through the Amazon Marketplace from third-party vendors.
| Characteristics | Values |
|---|---|
| Amazon's role in sales tax collection | Amazon is a marketplace facilitator and is required to calculate, collect, and remit sales tax on behalf of sellers. |
| States with sales tax laws | 45 states have sales tax laws and marketplace facilitator laws. |
| States without sales tax laws | Alaska, Delaware, Montana, New Hampshire, and Oregon do not have state sales tax laws. |
| Amazon's tax behaviour investigations | China, Germany, Poland, Sweden, South Korea, France, Japan, Ireland, Singapore, Luxembourg, Italy, Spain, the United Kingdom, multiple states in the US, and Portugal. |
| Amazon's effective tax rate | Amazon claimed a 24% effective tax rate between 2010 and 2018, while the Fair Tax Mark reported it as 12% during the same period. |
| States with Amazon tax since 2001 | North Dakota, North Carolina, South Dakota, and Texas |
Explore related products
What You'll Learn
Amazon's sales tax history
In the United States, Amazon's sales tax collection has undergone significant changes over the years. Until 2018, most online sellers, including Amazon, were not required to collect sales tax for out-of-state customers. However, after the South Dakota v. Wayfair case, Marketplace laws were enacted, making Amazon responsible for sales tax collection and filing for its sellers. As of 2025, 45 states with state sales tax laws have marketplace facilitator laws in place, with Missouri being the latest addition.
Prior to these laws, Amazon's sales tax collection practices varied across states. As recently as 2011, Amazon collected sales tax in only five states, giving it a competitive advantage over physical stores. However, due to changing legislation and agreements with states, Amazon gradually expanded its sales tax collection. In 2011, legislation in Texas required Amazon and other online retailers with a physical presence in the state to collect and remit sales tax. Amazon agreed to create 2,500 jobs and invest in new distribution centers in exchange for the state forgiving back sales taxes, and it began collecting Texas sales tax in 2012.
Amazon began collecting sales tax in North Carolina in 2014 and South Dakota in 2017. The company has also been collecting sales tax in North Dakota since at least 2001 due to its previous operation of a fulfillment center in the state. In 2017, Amazon also agreed to start collecting sales tax on its "Marketplace" operations in New York following a proposal by Governor Cuomo. Amazon has been investigated for its tax practices in multiple countries, including the United States, and has been criticized for tax avoidance, with reports indicating a lower effective tax rate than the standard corporate tax rate.
Creating a Power Law Function: A Simple Guide
You may want to see also
Explore related products
Amazon's sales tax in North Carolina
Amazon's sales tax policy in the United States has been a topic of debate and legislation for several years. In 2010, Amazon sued the North Carolina Department of Revenue to block its attempt to obtain the names and addresses of state residents who had made purchases from the company. The company had previously opposed state budget plans to collect online sales taxes. Former state Revenue Secretary David Hoyle vowed to collect sales tax on online purchases made by North Carolina residents.
Starting February 1, 2014, Amazon began collecting sales tax from North Carolina residents. The amount of tax charged depends on factors such as the identity of the seller, the type of item purchased, and the destination of the shipment. Amazon's decision to start collecting sales tax in North Carolina may have been influenced by the state's legislation and efforts to enforce the collection of online sales taxes.
Amazon's tax practices have been scrutinized in various countries, including the United States, where it has been accused of tax avoidance. The company has supported a federal solution to the sales tax issue, advocating for fair and simple legislation. As of 2025, Amazon collects and remits sales tax on behalf of sellers in most states due to Marketplace Facilitator laws. This change occurred after the South Dakota Supreme Court v. Wayfair case, which established that large online marketplaces like Amazon are responsible for collecting and filing sales taxes for their sellers.
While Amazon handles sales tax collection for many sellers, individual sellers are still responsible for complying with state sales tax laws and understanding their tax obligations. Amazon charges a fee of 2.9% per transaction for its tax service, and sellers must report and pay income tax on their profits from Amazon sales. The tax rate applied to orders on Amazon is based on the combined state and local rates of the delivery or fulfillment address, which may vary depending on the shipment destination and the type of address.
How General Assembly Creates Laws
You may want to see also
Explore related products
Amazon's sales tax in South Dakota
Amazon's sales tax policies and behaviours have been a subject of interest and scrutiny in various countries and states. In the United States, Amazon's tax practices have been investigated in multiple states, including South Dakota.
In South Dakota, the discussion around Amazon's sales tax collection began as early as 2017. On February 1, 2017, Amazon agreed to start collecting sales tax in the state. This decision was made following legislation passed in 2016, known as the Marketplace Facilitator laws, requiring retailers to collect and remit sales tax even without a physical presence in the state. This legislation aimed to address the issue of lost revenue from the increasing popularity of online sales.
Prior to this legislation, a 1992 U.S. Supreme Court ruling, Quill v. North Dakota, protected companies from being required to collect state sales taxes if they didn't have a physical store in the state. This ruling was overturned in 2018, further solidifying the requirement for Amazon to collect sales tax in South Dakota.
Amazon's agreement to collect sales tax in South Dakota was significant as it added to the list of over 30 states where the company was already remitting sales tax. The specific tax rate applied to purchases on Amazon depends on the combined state and local rates of the delivery or fulfilment address.
While Amazon handles sales tax collection for sellers on its platform, individual sellers are still responsible for complying with tax laws and regulations. They are advised to maintain accurate records and understand their tax obligations, especially for non-Amazon sales channels. Additionally, Amazon charges a fee of 2.9% per transaction for its tax calculation and remittance service.
The Evolution of the Law of the Sea
You may want to see also
Explore related products
Amazon's sales tax in Texas
In 2011, Texas passed a law requiring Amazon and other online retailers with a physical presence in the state to collect and remit sales tax. This legislation, pushed by Rep. John Otto, deemed any company with a store, distribution center, or other place of business in Texas as having a physical nexus for the purpose of collecting sales tax. Amazon began collecting sales taxes from Texas customers on July 1, 2012, with an agreement to create 2,500 jobs and invest $200 million in new distribution centers in the state.
The sales tax rate in Texas varies by location, with south Texas having an 8.25% combined sales tax. Amazon collects the state sales tax of 6.25%, but likely not the local sales tax. The tax rate applied to an order is based on the combined state and local rates of the address where the order is delivered or fulfilled. For example, if an order is shipped to another state, tax may still be calculated even if the customer's home state does not impose a sales tax.
Amazon's tax practices have been a subject of debate, with investigations in multiple countries and states. Amazon has argued for a federal solution to the sales tax issue, as long as the legislation is fair and simple. The company has also increased its political contributions to federal lawmakers and spent money on lobbying efforts related to tax legislation.
In recent years, Amazon has been collecting sales tax in more states due to Marketplace Facilitator laws, which require large online marketplaces like Amazon to collect and file sales tax for the sellers using their platforms. As of 2025, Amazon collects and remits sales tax on behalf of sellers in most states, although sellers may still need to register for permits in certain states for reporting purposes.
Contract Law: A Must-Have Skill for Engineers
You may want to see also
Explore related products
$32.45
Amazon's sales tax in other countries
Amazon's sales tax collection practices have been a topic of interest in various countries, with investigations taking place in China, Germany, Poland, Sweden, South Korea, France, Japan, Ireland, Singapore, Luxembourg, Italy, Spain, United Kingdom, Portugal, and multiple states in the United States.
In the United States, Amazon has been collecting sales taxes in some states for many years, but the specifics have changed over time. As of 2025, Amazon collects state-level sales taxes on all its direct sales in the US. However, in a few states, including Florida, Kansas, and Missouri, Amazon is not required to collect tax on sales made through the Amazon Marketplace. The tax rate applied to an order on Amazon.com is determined by the state and local rates of the delivery or fulfillment address.
In other countries, Amazon's sales tax practices can vary. In certain jurisdictions, Amazon or its subsidiaries may be responsible for collecting and remitting sales taxes, value-added taxes (VAT), goods and services tax (GST), or other indirect taxes to the relevant tax authorities. This is often the case when Amazon has a physical presence in the country or jurisdiction. In some cases, the buyer may be responsible for self-assessing and paying any applicable taxes on their purchase.
For example, in Texas, Amazon agreed to start collecting sales taxes from Texas customers beginning on July 1, 2012, as part of a deal with the state government. Similarly, Amazon started collecting sales tax in Alabama on November 1, 2016, by participating in the state's Simplified Use Tax Remittance Program. On the other hand, Amazon has collected sales tax in North Dakota since at least 2001 due to its fulfillment center in Grand Forks, even though no specific Amazon tax laws exist in the state.
The Laws of the Universe: A Cosmic Chicken or Egg?
You may want to see also
Frequently asked questions
Amazon began collecting sales tax in North Carolina on February 1, 2014.
Amazon started collecting sales tax in South Dakota on February 1, 2017.
Amazon began collecting sales tax in Texas on July 1, 2012.
Amazon collects the state sales tax of 6.25% in Texas.
Amazon has collected sales tax in North Dakota since at least 2001. The company operated a fulfillment center in Grand Forks from 2001 to 2005.
