NYT editorial: Amazon and Sales Tax

Amazon.com is in court again, fighting what ought to be a losing battle to defend its longstanding practice of not collecting sales taxes in most states where it does business.

In the latest case, reported recently by The Times’s Noam Cohen, the company’s roundabout argument is that it and its customers have a First Amendment right to tax avoidance.

To help you wrap your head around that one, here’s some background:

A 1992 Supreme Court ruling holds that a retailer must collect sales tax only if it has a physical presence in the customer’s state. So a bricks-and-mortar retailer that also operates online, like Target or Macy’s, will collect sales taxes. Similarly, if you go through Amazon.com to buy something from, say, Target, Amazon will collect taxes from you on Target’s behalf. But Amazon and some other purely online retailers do not generally collect taxes on their own sales.

That tax is legally due, but if online retailers don’t collect it, it’s up to the individual buyer to voluntarily pay the tax, which rarely happens and is very difficult for states to enforce.

(More here)