Amazon to collect 6% sales tax from W.Va. buyers
CHARLESTON, W.Va. -- Buying books, movies and music online will soon be 6 percent more expensive in West Virginia.
State residents buying merchandise from Amazon.com will have to pay state sales tax for the first time as the company changes its policies to comply with a new West Virginia law.
An Amazon spokesman confirmed that, on Oct. 1, the company will start collecting West Virginia's 6 percent sales tax on purchases shipped to the Mountain State.
The change stems from a law passed by the Legislature in April to collect more revenue from out-of-state companies like Amazon that do business here.
The law, passed at the behest of Gov. Earl Ray Tomblin, applies the state's sales tax to out-of-state retailers that have "an office, distribution house, sales house, warehouse or other place of business in West Virginia." Amazon recently opened a 70,000-square-foot service center in Huntington that employs about 200 people.
A 2009 study by economists at the University of Tennessee estimated that, in 2012, federal, state and local governments would miss out on about $12 billion in revenue by not taxing online sales. The same study estimated that West Virginia was missing out on about $50 million in revenue by not taxing Internet retailers.
The fiscal note attached to the new West Virginia law estimates that, by taxing only online retailers with an in-state presence, it will increase state revenue by $7 million to 10 million per year.
The law passed the state Senate unanimously. It passed the House of Delegates by a vote of 77-19, with exclusively Republican opposition.
Traditional brick-and-mortar businesses have long argued that Internet retailers enjoy a competitive advantage because they are not required to collect sales taxes in many of the states in which they sell products.
A 1992 ruling by the U.S. Supreme Court prohibited states from collecting sales taxes from businesses that do not have a physical presence within that state.
Congress is currently considering a bill that would allow states to tax online purchases regardless of where the seller is located, but the legislation is stalled and its prospects are uncertain.
West Virginia is the most recent of a number of states that have passed legislation allowing them to tax online purchases if the seller has a physical presence. The West Virginia law requires those online retailers to collect sales tax beginning Jan. 1, 2014.
This past spring, Indiana and Georgia passed similar laws, and Amazon agreed to collect sales tax on purchases in Connecticut after a lengthy legal dispute.
After years of battling over sales taxes, Amazon now collects taxes or has agreed to collect them on purchases made in at least 13 states. In the past, Amazon has gone so far as to close warehouses and distribution centers over sales tax disputes. In 2011, it closed a distribution center in Dallas and canceled plans to expand its operations there after Texas' comptroller demanded hundreds of millions of dollars in uncollected sales tax.
Amazon has said it now supports the national bill on taxing online purchases, preferring it to the hodge-podge of conflicting state laws.
Reach David Gutman at email@example.com or 304-348-5119.