One of the ways that Amazon got its start was by not charging state tax on items sold through the Amazon website. The company got away with this little consumer tax break by not owning any actual property in any state. But when Amazon opened up some warehouses in various states, taxes followed.
Until this point, Amazon did not charge state tax in ten states, but all of that will change on April 1st. By this April, the company will begin charging state sales tax in those states where it applies - New Hampshire, Oregon, Montana, Delaware, and Alaska do not have state sales tax.
This small change might give some brick and mortar stores a more even playing ground with the massive internet retailer.
Level But No Leg Up
Even though Amazon will now start charging state sales tax where applicable, this won’t mean the end of the company. It also won’t mean that brick and mortar stores will really be able to compete with Amazon. Many consumers still purchase items from Amazon because most things are cheaper through the website (there’s also the comfort of shopping at home, which is hard for some smaller retailers to compete with).
Amazon maintains its customer base mostly because it’s convenient to shop on Amazon. If you couple that ease with the fact that items on Amazon are cheaper, the result is a company that’s tough to beat. While many people enjoyed a tax-free shopping experience previously, that will be completely finished this April.
Why Brick and Mortar
If Amazon was able to offer tax free shopping to millions of consumers, why did the company begin to open up physical warehouse locations? That answers is easy enough to figure out. Amazon wanted to provide consumers with goods faster, quicker, and simpler than any other store.
In order to deliver items the same day or next day, Amazon had to open distribution centers. This is why the company started to create warehouse locations. At first, Amazon tried to open up these centers while still avoiding state sales tax, but this didn’t bode well with retailers in those states. Eventually, Amazon was ordered (by law) to charge sales tax across the board.
While paying more for items isn’t necessarily fun, many current Amazon users are having a mild reaction to the news today. Most Amazon regulars will still use the service simply because it is easy to use. Whether or not an additional sales tax has been added to purchases made through Amazon doesn’t seem to phase most consumers used to shopping online through the company.
If you happen to live in one of those last states where Amazon items were tax-free, you’ll have to start paying taxes this April. The only way to avoid state taxes is to move to a state where sales tax does not exist. Most Amazon shoppers, however, do not live in one of those states. While this might be a big of a ding for Amazon, brick and mortar retailers are likely happy with this news.