Thursday, February 18, 2010

Amazon Faces Sales Tax Threat

According to TechFlash, is facing new pressure by states to collect sales tax on web purchases. Lawmakers in Colorado, Virginia and Illinois are advancing online sales tax legislation, looking to plug budget holes. The stakes are high for Amazon, which currently collects sales tax in a only handful of states, giving it a key advantage over brick-and-mortar retailers.

Amazon engaged in skirmishes with various states over sales tax bills last year. Those bills sought to classify Amazon as having a physical presence — and thus the responsibility to collect sales tax — based on its ties to locally based affiliate marketers, who link to Amazon products for a cut of sales. Amazon threatened to end affiliate programs in states that enacted such laws, and did just that in North Carolina, Rhode Island, and Hawaii (though it later reinstated Hawaii affiliates after the governor there vetoed the bill in question).

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