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Amazon.com informed its North Carolina-based web site affiliates this week that it will stop accepting referrals from them as of July 1 if Amazon has to collect sales tax under a proposed state law, a spokeswoman for the retailer says.
Amazon.com Inc. informed its North Carolina-based web site affiliates this week that it will stop accepting referrals from them as of July 1 if Amazon has to collect sales tax under a proposed state law, a spokeswoman for the retailer says.
“North Carolina is saying that because Amazon has associates in the state with individual web sites with links to Amazon.com, that we have a physical presence in North Carolina and so have to collect sales tax from all North Carolina customers,” the spokeswoman says. “We believe that is unconstitutional.”
The U.S. Supreme Court has ruled that online and catalog retailers can only be required to collect sales tax from customers in states where the retailers maintain a physical presence, such as distribution centers or sales offices. Consumers are supposed to pay their own sales tax on goods purchased online and through call centers if sales tax is not charged by the retailer, but consumers rarely do, tax experts say. States, meanwhile, are looking for ways to shore up revenue shortfalls.
North Carolina is following the lead of New York State, which modified its state sales tax law last year to require online retailers with New York-based web site affiliates to collect and remit tax on all online sales to New York customers. Amazon lost a court challenge to the New York law, and it is collecting tax from customers within the state as it appeals that court ruling, the spokeswoman says.
Other states considering similar legislation include Hawaii, California and Connecticut.
Amazon started getting customers through online affiliates in 1996, but doesn’t reveal its number of affiliates, the spokeswoman says. The web-only retailer, No. 1 in the Internet Retailer Top 500 Guide, collects sales tax from customers in several states where it maintains physical facilities, including Washington, North Dakota, Kentucky and Kansas.