States push to make Amazon, others collect tax from online sales, but Web retailers fight back
SAN FRANCISCO (AP) — Tax-free shopping is under threat for many online shoppers as states facing widening budget gaps increasingly pressure Amazon.com Inc. and other Internet retailers to start collecting sales taxes from their residents.
Billions of dollars are at stake as a growing number of states look for ways to generate more revenue without violating a 1992 U.S. Supreme Court ruling that prohibits a state from forcing businesses to collect sales taxes unless the business has a physical presence, such as a store, in that state.
States are trying to get around that restriction by passing laws that broaden the definition of a physical presence. Retailers are resisting being deputized as tax collectors.
Until recently, the Supreme Court ruling has meant that Wal-Mart Stores Inc., based in Bentonville, Ark., would collect taxes from shoppers in all states with sales taxes, whether those shoppers buy items on or off the Web, because it has stores nationwide.
But Amazon, based in Seattle, wouldn't collect taxes from Floridians because it doesn't have a presence there. Although in such cases, shoppers in Florida are supposed to pay the tax directly to their state, few actually do.