Tax Free Amazon Sales have Ended for Minnesotans

Published On: 20th October 2014

From the internet

The days of Minnesotans not having to pay taxes on purchases from have ended.

Beginning on October 1, the online retailer started collecting sales tax from Minnesotans making purchases from the website. Online-only retailers are not required to collect state sales tax if they do not have a physical location in that specific state.

However, Amazon says that it is considering a number of opportunities to expand its operations into Minnesota.

The online retail giant has already collected state sales taxes from a number of states as it places warehouses and other operations within those states in order to speed up the delivery of their goods.

The state revenue department estimates that Minnesota loses around $400 million annually in uncollected sales tax for catalog, online, and other purchases that are made in other states by Minnesota residents. The impact that this has on businesses is an unfair price advantage, according to some businesses.

This unfair price advantage comes in the way of an individual being able to acquire an item for less online due to not paying sales tax. Because Amazon will provide free shipping on purchases that total more than a certain dollar amount, individuals have a price incentive to not purchase from local merchants. Instead, they purchase online and simply wait a few days to receive the item.

Amazon has been vague regarding what caused them to make this change now before any solid plans to expand into the state. Basically, this is a major mystery since Amazon went to great lengths in 2013 to avoid collecting sales tax in Minnesota. In fact, this avoidance went as far as Amazon cutting its ties to Minnesota-based affiliates, such as deal sites, bloggers, and online reviewers. They did this before a state law went into effect in July 2013 that required online retailers to collect sales tax if they at least had affiliates in Minnesota. Before then, Amazon paid businesses and people a commission for sales that they made from affiliate links that led to their website. Minnesota was just one of about 10 other states that they worked to avoid paying sales tax in. This is why there is a belief that the online merchant is expecting to expand in Minnesota.

As for the unfair price advantage, this is good news to the brick and mortar stores in the state. Amazon charging sales tax means they are automatically given a competitive edge against the online giant. Best Buy and Minneapolis-based Target have been proponents of a federal law that would allow states to collect sales tax for online sales, even if the company doesn’t have any kind of physical presence in the state. Amazon has actually expressed support for such a law as long as it is the same across the board rather than it differing from state-to-state. Amazon stands by the fact they offer the best prices regardless of whether or not they have to pay sales tax. They are also looking at same-day delivery in some areas, which would then up the ante on competitiveness if they open up such operations in Minneapolis, St. Paul, or elsewhere throughout the state.

Because of this move by Amazon, their Minnesota affiliates are back online.