The e-retailer also launches a charity program tied to online purchases.
Thad Rueter , Senior Editor
Connecticut on Friday will become the latest state where residents will have to pay taxes on purchases made from Amazon.com Inc., a spokeswoman for the state’s taxing agency says.
The move follows a deal forged in February that also calls for the No. 1 merchant in the Internet Retailer Top 500 Guide to build a warehouse in the state.
States can only require retailers to collect sales tax that have a physical presence in that state, according to a 1992 U.S. Supreme Court ruling. Connecticut previously tried to force web-only retailers like Amazon to collect sales tax with a 2011 law that required retailers that advertised on affiliate sites—such as blogs and coupon sites—to pay sales taxes, asserting that those affiliate relationships constituted the legal equivalent of a physical presence, or nexus, in the state. As Amazon has done in other states, including Illinois, it then cut its affiliate program in Connecticut, and did not collect sales taxes on purchases by Connecticut residents.
The state charges a 6.35% sales tax. A spokeswoman for the state’s Department of Revenue Services says the deal will bring in $15 million in sales tax this fiscal year.
Amazon did not immediately respond to a request for comment.
With Amazon set to collect taxes in Connecticut, the Amazon taxing situation stands at this:
• As of Nov. 1—when Wisconsin is scheduled to start collecting similar taxes—14 states will require the collection of taxes on Amazon purchases by in-state residents (some already do, but those laws are often ignored by consumers).
• That number will increase to 15 states when Amazon begins collecting taxes from Maryland residents. That will happen when Amazon opens a warehouse on Baltimore, though the exact date has not been released.
• With the addition of Connecticut, Wisconsin and Maryland, Amazon will collect taxes from states with a combined population of nearly 161.9 million. That represents about 51.6% of the U.S. population of 313.9 million, according to U.S. Census Department figures.
In other Amazon news, the e-retailer has launched a program called AmazonSmile.
Via an online store at smile.amazon.com, a consumer can make purchases that will result in Amazon sending 0.5% of the purchase price to charities designated by the buyer, with no cap on the donation amount. Amazon says consumers can choose from some 1 million U.S. charities and that donations come via the AmazonSmile Foundation. Shoppers who buy via the site will find the same products and selection found on the regular Amazon e-commerce site, the e-retailer says.
“We’re offering customers a way to support charitable organizations around the country that’s simple and automatic,” says Ian McAllister, general manager, AmazonSmile. “We think customers will love the opportunity to support their favorite organizations without changing how they shop, and there’s no cap on how much Amazon will donate.”