- Online retailer doesn’t collect sales tax from merchants
- Supreme Court may revisit 1992 ruling establishing precedent
President Donald Trump waded into a longstanding scrap between online retailers and their brick-and-mortar rivals with a Twitter posting Wednesday about Amazon.com Inc. and taxes.
And he has a point — though the Seattle-based online giant has taken steps to reduce its tax advantage in recent years — retail industry specialists say.
Amazon began collecting sales taxes on purchases in all states that levy them earlier this year, despite an exemption that allows online retailers to avoid collecting them in places where they don’t have a physical presence. But Amazon still avoids charging shoppers sales taxes when they buy from one of its third-party vendors — sales that make up about half the company’s volume.
Untaxed third-party sales might provide an advantage over brick-and-mortar retail chains, which have their own robust online operations but have to collect sales tax on all purchases in states where they have physical presences. Many large chains have stores in almost every state.
“Amazon is doing great damage to tax paying retailers,” Trump said in a pre-dawn Twitter post Wednesday. “Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”
Amazon founder Jeff Bezos owns the Washington Post newspaper, which Trump has frequently attacked over its investigative coverage and editorial criticism of his campaign and administration. The president has repeatedly targeted the retailer in tax-related Twitter messages.
A spokesman for Amazon declined to comment.
Trump’s latest broadside against Amazon comes at a tumultuous period in his relationship with corporate America. Citing remarks in which Trump equated neo-Nazis to counter-protesters, several corporate executives quit White House advisory groups this week before the president said Wednesday the groups would be disbanded.
It was unclear whether Trump’s remarks about Amazon signal his willingness to campaign for federal legislation to address online sales taxes. But any support for brick-and-mortar retailers should help, said Jim Taylor, chief executive officer of Brixmor Property Group Inc., which owns open-air shopping centers.
“It’s tough to predict what may or may not happen,” Taylor said. “Yet, there is an intrinsic idea of fairness here that appeals to most people about the collection and payment of taxes.”
In its early days, Amazon capitalized on its status as an online retailer and built warehouses in small states like Nevada and Kansas close to big states like California and Texas. That allowed Amazon to sell goods to shoppers in those populous states without collecting sales taxes since it lacked a physical presence. As Amazon grew, its focus shifted to quick delivery, requiring it to build warehouses closer to big cities and in big states. It owes sales taxes in those locales.
Despite a 1992 Supreme Court ruling that established the precedent for exempting online retailers from sales taxes, various states have enacted “Amazon laws” to tax online sales the same way that brick-and-mortar sales are taxed. About two dozen states have signed on to an agreement that allows retailers to voluntarily collect sales taxes, and Amazon is one that does so.
At the federal level, several bipartisan bills have been introduced to allow…