Amazon’s CEO Calls for Federal Action on Sales Taxes
Amazon has already pulled up stakes (or refused to put them
down, in some cases) in several states over disputes involving the collection
of sales taxes. It’s
not that the company refuses outright to collect taxes; it does so in Europe
and elsewhere, but it refuses to deal with measures it views as unconstitutional
under current federal law.
Appearing yesterday at the headquarters of Consumer
Reports, Mr. Bezos said, “In
the U.S., the constitution prohibits states from interfering in interstate
company and others should only be required to collect sales tax in states where
they have a physical presence or “nexus,” he said. Amazon rejects
the argument that affiliates represent a local presence for the e-tailer.
Bezos also disputed the notion that his company plays by a different set of
rules from brick and mortar retailers that sell goods online.
“Our point-of-view on this is that we should simplify the sales tax
system, and we’ve been insisting on this for 10 years. We support the
streamlined sales tax initiative, and 22 states have signed on. The right way
to fix this is with federal legislation,” Mr. Bezos told Consumer Reports. “Sales
tax is very complicated. We’re no different from big chains of retailers.
They don’t collect sales tax in states where they don’t have nexus
either. So everyone is following the same rules.”
While Mr. Bezos expressed
a willingness to collect sales tax where Amazon has a physical presence, the
company recently pulled plans to open distribution centers in South Carolina
when it was unable to get legislation passed that would exempt it from doing
The House in South Carolina voted 71 – 47 to reject a tax exemption for the
company. The state’s new governor, Nikki Haley, did not support the exemption
that was negotiated by her predecessor Mark Stanford.
“As a result of today’s unfortunate House vote, we’ve canceled
$52 million in procurement contracts and removed all South Carolina fulfillment
center job postings from our (web)site,” Paul Misener, Amazon vice president
for global public policy, told The State newspaper at the time.
- Amazon’s Bezos: Federal legislation required to address sales tax issues –
- Amazon could cut ties in more states over tax dispute – Reuters
- Amazon packing after House vote – The State
- Haley: No fallout from Amazon loss – The State
Discussion Questions: Do you agree or disagree with the position that affiliates represent a local presence or nexus for Amazon? Is Jeff Bezos correct that federal legislation is needed to clarify when companies are required to collect sales taxes for states?