Balancing sales tax against commerce

Just a short week after Governor Perry vetoes a bill that would require Internet companies with a warehouse in the state to pay sales tax, Texas lawmakers push another bill through the House with similar language.

SB 1 non only re-establishes the nexus rule of a warehouse as physical presence but also institutes a stricter pre-payment requirement and additional penalties and fees for failure to file or not filing timely. Other tax adjustments include beverage and motor vehicle sales and use tax changes.

On the Amazon front, the Seattle-based Internet retailer has now severed its relationship with affiliates in Connecticut. Connecticut has enacted its bill declaring state affiliates establish nexus for Internet retailers and therefore, they should collect and remit sales taxes for purchases made by residents of that state. As reported by Greenwichtime.com, affiliates are “…frustrated with Amazon.com.” According to one affiliate, “Amazon can, from a technical and business point of view, go about collecting sales tax and paying it back to the states. Other people do it.”

Connecticut representatives urge for a repeal of the action stating, “…it is unfair to make a point at the expense of state residents trying to supplement their income by advertising with online retailers.” eBay’s director of U.S. government relations, David London, expresses, “Tax barriers that block small businesses from using the Internet will stifle job growth, reduce competition for retail giants and undermine entrepreneurial small businesses trying to spur economic growth.”

As arguments and discussions continue, it has been noted that many states are in the debate in order to encourage the federal government to get involved. In the past, Amazon has expressed support for federal legislation that forces a consistent approach to sales tax for all states.

With the constant flip-flopping of state legislation regarding nexus and sales tax, businesses face challenges that expose them to greater risk of audit. Avalara delivers compliant sales tax automation processes to businesses of all sizes that ensure your business is applying the correct rules and regulations for each state for which you have sales tax liability.

Contact Avalara today and see how affordable sales tax compliance can be!