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Amazon Collects Taxes ... for a Price

Posted on 11.07.2011

As the ongoing battle between Amazon and the Taxman continues, the e-commerce giant has finally begun to cater to the demands of government officials looking to help keep brick-and-mortar stores competitive and relevant.

This week, the online retail company announced plans for a service which will collect sales tax for its third-party merchants.

The Amazon program, which will charge merchants a fee for the service equal to 2.9 percent of what it collects in sales tax, is expected to begin in early 2012. The service is optional and will be offered to third-party vendors in all 50 U.S. states.

The Seattle-based company currently collects sales taxes from its own customers in Washington, New York, Kentucky, Kansas and North Dakota, as well as in some foreign countries where it conducts business.

U.S. Internet retail sales topped $176 billion last year and are expected to reach $279 billion by 2015, according to Forrester Research Inc. Online sales currently account for about 9 percent of total retail sales, a share that's projected to triple over the next few decades. State and local governments are determined to force Amazon and others to pay up.

In the Help section for sellers on, Amazon says the tax collection service is available to Marketplace Professionals and operators of Amazon Webstore e-commerce sites. A Marketplace Professional is any business or individual that sells 40 or more items a month on and pays Amazon a monthly selling fee of $39.99 plus other transaction fees. (Smaller sellers not classified as Marketplace Professionals pay Amazon 99 cents per sale plus other transaction fees.) Retailers that sell through their own branded Amazon-hosted Webstore e-commerce sites pay monthly fees starting at $24.99 plus transaction fees.

Clearly, this issue is the first in what will likely be a long, drawn-out discussion about taxes and e-commerce as the majority of consumers begin to drift towards online shopping. Since Amazon is, without a doubt, the biggest kid on the playground, it seems they'll try to smooth out as many of these concerns with the e-commerce industry-leading company as they can.


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