Amazon will start charging sales tax in Minnesota
September 24, 2014 04:13 PM
Amazon.com Inc. will start collecting sales taxes Oct. 1 on purchases made by online shoppers in Minnesota, the retailer confirms. The state joins 21 others in which Amazon customers are charged sales taxes, including bordering Wisconsin and North Dakota. Amazon now charges sales tax to 67.86% of consumers in the U.S.
The retailer would not say if it intends to build a warehouse in the state after sales tax collection starts. When Amazon started collecting taxes in other states, it generally also announced it was building warehouses—such was the case in California earlier this year. “We’re considering various opportunities and plan to expand to the state,” is all an Amazon spokesman would say.
Law applying to web-only retailers ties in-state collection of sales taxes for web purchases with a merchant’s presence in the state—that can include not only warehouses but offices or stores.
Some states also claim that a retailer should collect taxes from state residents if affiliate web sites in the state send traffic to the retailer’s e-commerce site. Amazon reportedly cut its affiliate ties in Minnesota in 2013 to avoid having to collect sales taxes.
Amazon operates more than 100 warehouses around the world and maintains nearly 50 million square feet of fulfillment space in North America, according to Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell on Amazon, and Colin Sebastian, a longtime Amazon observer and e-commerce analyst who works for Robert W. Baird and Co.
Amazon declines to say why it will start charging the tax in Minnesota, and calls to state officials were not immediately returned. The state’s general sales tax rate stands at 6.875%.