Amazon Now Collecting Sales Taxes Throughout Alabama

Amazon, the world’s largest online retailer, began collecting sales taxes in Alabama today (Nov. 1, 2016), just in time for the 2016 holiday shopping period.

Alabama Revenue Commissioner Julie Magee estimates Alabamians will purchase as much as $200 million in merchandise from Amazon in November and December alone.

Magee expects a $40 million to $50 million influx of additional sales taxes during the 2017 fiscal year from 74 online retailers voluntarily remitting to the state due to a 2015 law reinforced by a Jan. 1, 2016, Revenue Department rule change. “Three of the companies in the program are amongst the top online retailers,” Magee told WSFA-TV in August. “Amazon will be the fourth in that category,” she said.

online-shopping-graphicSince Oct. 1, 2015, retailers with no stores, warehouses or distribution centers in our state have been able to voluntarily collect and remit sales taxes from Alabama customers under the Simplified Seller Use Tax Remittance Act. As of Jan. 1, 2016, a Revenue Department rule requires remote sellers with more than $250,000 in sales in our state to collect sales tax on transactions with Alabama customers.

Brick-and-mortar stores have been at a disadvantage … we think evening the playing field is a good thing,” said Bob Couch, owner of Couch’s Jewelers in downtown Anniston and an Alabama Retail member since 1992.

Couch’s sentiment expressed to The Anniston Star in late August reflects the feeling of many Main Street Alabama retailers.

Some, although not all, retailers who had been collecting zero sales tax will now be collecting a flat 8 percent from Alabama consumers buying online. That at least comes close to the amount Alabama brick-and-mortar stores have to tack onto every purchase.

Based on a 1992 Supreme Court decision, states have been unable to compel sellers without a physical presence in the state to collect sales tax. Tired of waiting on Congress to remedy this federally sanctioned advantage for online-only behemoths, the Alabama Legislature and Revenue Department came up with the voluntary program as a way to enforce the state’s sales tax laws equally.

Not all remote sellers are choosing to participate.

In response to almost $187,000 in Alabama assessments and fines, computer/electronics retailer Newegg Inc. filed an appeal with the Alabama Tax Tribunal to block enforcement of Alabama’s 2015 law and 2016 rule. According to Internet Retailer, Newegg is the 17th largest online retailer.

Local retailers play by the rules and collect the state sales tax on every purchase, 365 days a year,” said Alabama Retail Association President Rick Brown. “It’s time for large online retailers to follow the same rules. The state is simply trying to enforce the law equally.”

This article can also be found on Page 6 of the November edition of Alabama Retailer