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2014 heralds Sales Tax for Amazon Shoppers in a troika of US States

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Amazon agreed to begin collecting sales tax in three states in the business year of 2014, bringing the headcount order to 19, the states, in which it automatically adds tax to purchases. Those 19 states have a combined population of roughly 180 million, more than half of U.S. residents.

In the three latest additions, the levies are expected to generate more than $50 million a year collectively, according to state officials.

Amazon has agreed to collect sales tax in a growing number of states as it goes on to expand its warehouse network. Until recently, Amazon had been fighting fiercely not to collect sales tax in most of the states – which it considers a key advantage over brick-and-mortar retailers. Court decisions generally allow only states in which a retailer maintains a physical presence to require the retailers to collect sales tax.

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Amazon from its quarter has agreed to build two new warehouses in Tennessee. In the other states, it agreed to collect sales tax beginning Jan. 1 to resolve long-running disputes with state officials.

Amazon suffered a setback in December when the U.S. Supreme Court declined to hear its appeal of rulings regarding sales-tax collection in New York State. New York had required Amazon to collect the tax because it has affiliates – firms that send online traffic to Amazon in exchange for a fee – in the state.

The court’s move could open the door for other states in queue to require Amazon to collect tax. In some states, including Minnesota and Missouri, Amazon severed relationships with affiliates rather than collect the tax.

The roster of states in which Amazon collects tax isn’t scheduled to grow again until 2016, when the retailer will tax purchases in South Carolina.

Amazon last year reached a deal with Florida, the fourth-largest state, to bring as many as 3,000 jobs as part of a $300 million investment in warehouses and other infrastructure between now and 2016, when it would presumably subject customers to automatic sales tax collection. Amazon hasn’t notified exactly when that would take effect for Florida’s 19.3 million residents.

Even as Amazon fights sales taxes in some of the states, it is supporting a bill that would apply an online sales tax nationwide. Amazon thinks that such a law would level the playing field with e-commerce rivals who don’t have affiliates. The bill meanwhile is pending in Congress.

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Jawed Akhtar

A Journalist by interest and a Music Enthusiast by passion. Wedded to Mother Nature, Jawed indulges his aesthetics in travelling and reading books of varied genres. Having covered News stories for top Dailies in his formative years, that is, he is game for tryst with Technology at Techmagnifier.

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