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Forbes.com has a long piece discussing the likelihood that Amazon.com’s “days as a haven for sales-tax shirking shoppers” may be over, as “the battle has entered a new stage as Amazon builds warehouse/fulfillment centers in more locations, states grow hungrier for revenue, and a rising sales tax rate (it now averages 9.64% nationwide) puts retailers who do collect tax at an ever bigger disadvantage.”

Indeed, the story notes that “Amazon is not only the biggest retailer on the web, but also the only one of the top 10 (for 2009 as ranked by InternetRetailer) which doesn’t collect sales tax from most buyers.” And even Amazon seems to concede - even as it goes to court wherever necessary to defend its position - that eventually it is going to lose on this one, acknowledging in its annual SEC 10k filing that “Our fulfillment center and customer service center networks, and any future expansion of them, along with other aspects of our evolving business, may result in additional sales and other tax obligations.”
KC's View:
As noted here before, my thinking has evolved on this one ... and it is hard to argue that Amazon’s business model depends on sales tax exemptions to survive. For competitive reasons, there is no rationale for Amazon having this kind of competitive advantage over brick-and-mortar retailers; from a public policy perspective, governments can no longer afford to ignore this source of revenue at a time when many services are being cut. (Though I suspect that before Amazon builds distribution centers around the country, it will look for the same kinds of tax breaks that a lot of big retailers seek and obtain.)

I do have a bit of a problem with the “sales tax shirking shoppers” line in the Forbes story. I understand why the writer puts it that way, but I would continue to argue that I have rarely, if ever, purchased from Amazon because of the lack of sales tax ... it has a lot more to do with discounted prices, selection and convenience.