Hello from Amazon: You owe taxes

I think it’s past time for Amazon to collect and administer the payment of state sales tax. That’s especially true in states like Tennessee, where the company has clearly established nexus with its multiple distribution facilities here. (But the state gave away the store — or, at least until January, 2014, sales tax — to get those facilities.)

However, just because Amazon has never collected sales tax doesn’t mean customers are not required to pay tax on a purchase in the form of a “use” or “usage” tax.

It seems clear that Amazon is winding down its long-fought battle with states over sales tax. It was perhaps tolerable when they were small and growing and there were thousands of affiliate sites in every state. With those affiliates, they had the chance to hide behind the cloak of small business. (Affiliate sites are websites, like this one, that set up an account to enable us to grow rich from taking a cut of the sale of any items we link to on Amazon that leads to a purchase. Each year, I generate literally tens of dollars through such an arrangement.)

But now, while still small compared to Walmart, Amazon is a juggernaut.

I am not anti Amazon, as the 12 readers of this blog know. But on this issue, I am not supportive of their position.

This morning, I received the following email from Amazon that was reported to be in the works a week or so ago.

It’s another nail in the coffin of Amazon’s “no sales tax” position:

Hello from Amazon.com,

Thank you for being a loyal customer of Amazon.com LLC.  We appreciate your business and look forward to continuing to provide you vast selection, low prices, fast delivery and convenience.

As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee.  However, the state of Tennessee requires us to provide the following notice to you:

You may owe use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the calendar year unless an exemption exists under state law or you have already paid the tax. A sale is not exempt under state law because it is made through the Internet. The total sales price of purchases you had shipped to Tennessee in 2011 was $xxx.xx. This is the amount that you may include on your Tennessee use tax return to calculate the appropriate use tax owed unless you have already paid the tax.

As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.

Total sales from www.amazon.com $xxx.xx
Total sales from www.endless.com $0.00
Total sales from www.myhabit.com $0.00
Total sales from www.amazonwireless.com $0.00
Total sales from www.smallparts.com $0.00

In addition, the state of Tennessee requires us to provide you with the following link that you can use to get more information and pay any taxes due:

Use Tax Page: https://apps.tn.gov/usetax
Please note the following:

• While Amazon.com LLC does not report this information directly to the state of Tennessee we are required to provide this information to you based on Tennessee Code T.C.A. § 67-6-5 (f)(3) signed into law March 23, 2012.
• This notification has been sent to all customers that had purchases delivered to Tennessee. If you are not a resident of Tennessee, the most common reason for receiving this notification is that you may have sent a gift to a recipient in the state.

For more information you may also view our Tennessee Use Tax Notification Page at:
www.amazon.com/gp/help/customer/display.html?nodeId=200909330

Sincerely,
Customer Service

In other words, they’re from Amazon, and they’re here to help me.

About Rex Hammock

Founder/ceo of Hammock Inc., the customer media and content company based in Nashville, Tenn. Creator of and head-helper at SmallBusiness.com.
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  • http://gravitationalpull.net/wp/ ampressman

    In the early Amazon era, the NY Times magazine did a great piece about the state’s use tax and found that only something like 57 people in the whole state had paid it, the 57 “most honest people in the state of New York,” or something like that, they wrote.

    My initial, semi-automatic-contrary-to-the-crowd reaction on the Amazon sales tax dispute was to assume that it was b.s. because catalog and telephone 800 sales never raised the same hackles. I did go look up the numbers the other day and catalog sales were never near as large as Internet sales (like 1/6 as much 20 years ago as Internet sales are today). So I’m shutting up about that.
    That said, while it’s clearly dickish on Bezos part not to resolve this all right now, I don’t think the ultimate resolution will be surprising or terribly harmful to Amazon’s business.