The state of Florida could reap as much as $80 million in new revenue from Amazon.com, Inc. (NASDAQ:AMZN) paying a state sales tax that could impact as many as 20 million people, according to a report in the Wall Street Journal.
Warehouse building spree triggers sales tax collection obligations
After moving warehouses into the fourth-largest state in the country, Amazon is subject to a 6% sales tax. In order for an online retailer to pay sales tax, they must have an office or warehouse in the state. Amazon is building new warehouses in Ruskin and Lakeland, near Tampa and Orlando.
As much as 60% of Amazon’s US customers now pay sales tax
After the addition of a Florida facility, as much as 60% of the US population – 190 million citizens – will now be subject to state sales tax on purchases from the Seattle firm. Florida is the 21st state to charge sales tax on Amazon purchases, the report noted.
Strategy change in sales tax avoidance
A key to the Amazon strategy had been to offer products without requiring customers to pay sales tax, providing a benefit over brick and mortar retailers. Over time, Amazon’s aggressive avoidance of paying sales tax lessened and it is now seeking to build distribution around the country. In fact, the online retailer lobbied in favor of a national sales tax for all online retailers, known as the Marketplace Fairness Act, according to the report. With this new law, passed by the US Senate last year, online retailers with at least $1 million in yearly out of state sales would be required to collect sales tax from customers.