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Will Indiana Enact Amazon Tax Law?

  • Apr 23, 2014 | Gail Cole

 Don't let online sales tax catch you unawares.

Online retail giant Amazon.com began collecting online sales tax legislation less than two weeks later?

Indiana Senate Bill 269, introduced in January 2014, seeks to add “to the definition of a retail merchant engaged in business in Indiana to include arrangements with any person, other than a common carrier, to facilitate the retail merchant’s delivery of property to customers in Indiana.”

The bill specifies that “a person may be required to collect and remit sales or use taxes if the person conducts activities in Indiana on behalf of a retail merchant that are significantly associated with the retail merchant’s ability to establish and maintain a market in Indiana.” This is classic online sales tax legislation, also known as click-through nexus, affiliate nexus, or Amazon tax.

Why Amazon collects Indiana sales tax

In 2012, after much contention over online sales tax, Amazon and Indiana reached an agreement whereby fulfillment centers, in the Hoosier state. The centers create nexus—the physical connection between a state and a business that triggers a sales tax collection obligation.

Amazon sales tax is considered a big prize. The company does so much business across the country (and world) that it can generate a significant amount of sales tax revenue for states.  Indiana expects the Amazon tax will generate an additional $22.5 million in 2014 and $57 million in 2015. Yet the Amazon fulfillment centers do not create a sales tax obligation for other remote retailers. As a result, SB 269 was proposed.

The bill has seen no activity since it was referred to the Senate Tax and Fiscal Policy Committee, shortly after its introduction. As a result, it is unlikely it to apply to “the collection of use tax on remote sales occurring after June 30, 2014,” as originally written. But that doesn't mean it's gone away for good.

Do you sell into multiple states? Is your business ready for an expanded online sales tax?

photo credit: Animal Park via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.