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Sorry Connecticut, You'll Have to Pay Sales Tax on Amazon Purchases Soon

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By , dealnews Features Director

If you're familiar with the ongoing saga between e-commerce retailers and the states that want sales tax charged during online transactions, then you're probably aware that Amazon is slowly being forced to collect tax for a growing number of states. In fact, over the summer, we wrote about the eight additional states that can count on paying sales tax when making a purchase with Amazon. Last week, it was announced that Connecticut will be added to that list.

Beginning in November 2013 — just in time for the chaos of Black Friday! — Amazon will charge Connecticut residents the state's 6.35% sales tax. The seller also announced that it will invest $50 million in the coming years to open an Amazon facility in the state.

In general, an online vendor isn't required to collect sales tax if the site doesn't have a physical presence in the state where the order is placed, but as online commerce has grown, states have balked; many consumers don't report the sales tax on their tax returns like they should, and governments feel as if they're missing out on a large revenue stream. In fact, it's estimated that Connecticut will see $23 million in additional revenue in the first two years that Amazon collects sales tax. Brick and mortar retailers, too, have also pushed hard for web merchants to collect sales tax, arguing that it would make for fairer competition.

It's theorized that Amazon has relented in some states because the seller hopes to expand its network of U.S. warehouses, potentially offering same-day delivery to more consumers. This might explain Amazon's co-announcement that it will collect Connecticut taxes while also investing $50 million in development in that state.

But lest you think Amazon is now hunky dory with charging sales tax across the board, this news coincides with the fact that the merchant's lawyers are arguing in court that it should not have to collect in New York. The outcome of that appeal, which involves both Amazon and Overstock, is due in June, according to The Huffington Post. Thus, the collection of sales tax online is a hot button issue that isn't going away, especially as the U.S. Congress sits on legislation to universally address the issue.

Readers in Connecticut: Will this decision affect the way you shop? Will you be more willing to buy in-store, or will you continue to shop at Amazon at the usual rate?


Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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6 comments
nycdtsgt
Use Ebay and other websites that wont.
quiksilver3
The other important part of the announcement was that Amazon was looking for a location in Connecticut to build a warehouse or distribution center. That center, once owned by Amazon, will force them to start charging Connecticut sales tax as they then would have 'nexus' in Connecticut. So, in some way, the announcement about charging CT sales tax is misleading. They would have to anyways if they go through with their plans.
nexusmtz
For people who pay their taxes properly, it doesn't matter if the seller collects the tax, or if the buyer pays it directly to the state. The only people who would be affected are those who wouldn't have paid the tax at the end of the year.

From the seller's perspective, I can understand that Amazon wouldn't want to deal with 50 sets of tax laws, but I guess they could choose not to sell to CT residents if it bothers them that much.
clanecks
Amazon is not so much fighting other states on whether or not to charge sales taxes. Their current fight is whether or not to pay past taxes in exchange for charging future taxes.
jcauthorn
In all fairness, most states laws require you to pay "use taxes" on your purchases where the seller is not required and does not charge you for the tax. This inter state commerce that allows the seller to not charge it is what has largely fueled internet sales growth. Charging the taxes is unlikely to change people's buying habits, but it will even the scores for many brick and mortar stores.
I am glad that Amazon is still fighting New York and other states over this issue.
If you don't like getting taxed and spent into debt, you might want to reconsider who you vote for. (Have democrats ever seen a tax they don't like?)
alanec
well au revoir Amazon, there is other fishes in the sea.
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