In many states Amazon does not have any physical locations or employees, therefore, Amazon is not required to charge and collect sales tax in many states. States have taken aggressive tactics by arguing that Amazon has affiliates in their state or servers in their state which constitute nexus and require the online retailer to charge and collect tax. Unfortunately, for the states that get pushy with Amazon, Amazon in turn threatens to cancel its affiliate programs which would leave many state residents jobless. What ends up happening is the state gives Amazon immunity from tax collection for a few years and Amazon concedes to nexus after the period. In addition, Amazon also agrees to build a facility that will bring jobs to a state.
On May 16, 2013, the Daily Business Review reported that Governor Rick Scott of Florida rejected a deal to bring Amazon to Florida. The moved shocked many Florida state and local tax professionals as many other states have accepted similar deals to bring Amazon to their state. Further, Amazon did not charge sales tax to Florida residents. While Florida residents are required to pay use tax on online purchases, close to no one remits use tax.
On June 14, 2013, my hometown newspaper, the Palm Beach Post reported the Governor changed his mind. Specifically, between now and 2016, Amazon will move to Florida which will bring thousands of jobs to the state. The project will cost an estimated $300 million. From a state and local tax attorney’s perspective this also means that Amazon will have to start charging tax on its online sales to Floridians. While it was undisclosed one can assume that Amazon will be getting incentives for the construction project. It will be interesting to see where the locations of the new Amazon facilities will be.
About the author: Jerry Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, native American taxation, federal estate planning, and Florida probate. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email JerryDonnini@Floridasalestax.com or phone at 954-642-9390.