News

Wisconsin adds sales tax to Amazon shopping cart

Wisconsin adds sales tax to Amazon shopping cart

ADDING TAX TO YOUR CART: Wisconsin is the latest state to add sales tax to online purchases from Amazon. Photo: Reuters

By Patrick Temple-West

WASHINGTON (Reuters) – Wisconsin next month will become the 14th U.S. state to begin collecting sales tax on online purchases through Amazon.com Inc, joining a trend toward squeezing more revenue from e-commerce.

Effective November 1, the Midwestern state said sales tax will be added by Amazon to purchases made by Wisconsin residents because the online retailer is opening a distribution center in Kenosha, giving it a physical presence in the state.

Under the law, that means the state can require Amazon to begin collecting sales tax. In states where Amazon has no physical presence, the company does not generally collect the tax, giving it a pricing edge over bricks-and-mortar merchants.

The new 5-percent “Amazon tax” will add about $30 million a year to state revenue, Wisconsin Department of Revenue spokeswoman Laurel Patrick said on Wednesday. The state collected a total of $4.4 billion in sales taxes in fiscal 2013.

Amazon did not respond to requests for a comment.

The company’s website lists 13 states where it is already collecting taxes and turning over the proceeds to state coffers.

The Seattle-based titan of e-tailing has been fighting one-on-one battles with the 50 states for years over sales tax, with the federal government so far failing to intervene effectively.

The United States has no national sales tax and Congress has not moved ahead with proposed legislation that would give all states the power to enforce their sales tax laws on e-tailers.

Under a 1992 Supreme Court decision, retailers without a physical presence in a state do not need to collect and remit taxes in that state on each sale. Consumers are supposed to pay the tax on their own, but very few do.

Amazon supports federal legislation for nationwide state sales tax enforcement, but other online retailers, including eBay Inc and Overstock.com Inc, have fought it.

Fitch Ratings has estimated that states in which Amazon does not collect sales tax are losing out on $11 billion in revenue.

West Virginia this month started collecting tax on Amazon sales; and Virginia did so last month. Other states are fighting in court for the right to collect the tax.

Colorado’s 2010 legislation requiring reporting by retailers to the state of sales tax owed from online purchases is being challenged by the Direct Marketing Association, a trade group.

Last month, Amazon and Overstock asked the Supreme Court to hear oral arguments in a dispute over New York’s law for sales tax collection from out-of-state retailers. The companies contend the law conflicts with the court’s 1992 ruling.

The 13 states in which Amazon is now collecting sales tax include Arizona, California, Georgia, Kansas, Kentucky, New Jersey, New York, North Dakota, Pennsylvania, Texas, Virginia, Washington and West Virginia.

Recent Headlines

in Sports

This week’s top sports shots

little

A look at the biggest stories and best photography in sports this week.

in Sports

This weekend’s sports schedule

yankees

A complete look at this weekend's sports schedule.

in National

Making headlines this week

surf

A look at the week's biggest newsmakers and the stories you won't soon forget.

in National

WATCH: The history of Labor Day

21-overlay4

While you take your three day weekend, remember those who struggled to get Friday and Saturday off.

in Lifestyle

Rice replaces ice in India bucket challenge

An Indian school boy eats a midday meal provided free at a government school in Hyderabad, India, Thursday, Sept. 5, 2013. India has offered free midday school meals since the 1960s in an effort to persuade poor parents to send their children to school, a program that reaches some 120 million children. The country now plans to subsidize wheat, rice and cereals for some 800 million people under a $20 billion scheme to cut malnutrition and ease poverty.

The famous "ice bucket" challenge is inspiring thousands of Indians to follow suit, but with a twist - they are replacing ice with rice to help the country's hungry people.