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Amazon to collect Nebraska sales tax, January 2017

  • Dec 28, 2016 | Gail Cole

 Amazon will collect Nebraska sales tax beginning January 1, 2017.

In step with what appears to be a new trend, online retailer Amazon.com has announced that it will apply sales tax to Nebraska transactions as of January 1, 2017.  It will also begin collecting tax in Iowa, Louisiana, and Utah on the first of the year.

As it's been with the other three states, the company’s announcement was brief and to the point: “Amazon will begin collecting sales tax in Nebraska on January 1, 2017.” No further details were provided, such as its reasons for collecting tax now. Businesses aren’t required to collect tax in Nebraska unless they have a physical presence there, such as an office or warehouse — and Amazon doesn’t. According to Nebraska Tax Commissioner Tony Fulton, the ecommerce giant is “exhibiting responsible corporate citizenship.”

However, states are increasingly looking to tax remote transactions. Indeed, the Nebraska Retail Federation announced in late November that it would push the Nebraska Legislature to put an end to “legalized tax evasion” (that many out-of-state retailers don’t collect tax in the Cornhusker State). State Senator Dan Watermeier has agreed to introduce a bill.

Although it's a big on, Amazon is only one retailer and it represents “only a portion of the online sales made by Nebraskans, perhaps 20 percent.” Yet a 2015 report sponsored by the American Booksellers Association predicted that taxing Amazon sales could increase Nebraska’s annual sales tax revenue by $18 million. Were Nebraska to enact an economic nexus law similar to South Dakota’s, which encourages voluntary tax compliance, millions more could be collected.

Not a new tax

Goods purchased from online or catalog retailers are already subject to tax in Nebraska. If sales tax isn’t collected by the retailer at the point of sale, consumers are supposed to remit use tax directly to the state with their annual income tax returns. Compliance is extremely low, however, and enforcement is difficult.

A changing tax landscape

The rapid expansion of Amazon’s tax collection is likely to have an impact on other state’s sales and use tax policies.  It may also impact federal efforts to grant states the authority to tax remote sales. Read more about what’s up with Amazon tax.

For companies doing business in multiple states, the changing tax landscape makes tax compliance more complex. Tax automation software facilitates sales and use tax compliance for businesses of all sizes, in all states. Learn more.

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.