Amazon buyers shrug at sales tax
Greg Eid buys a lot of household goods on Amazon.com.
He’ll continue buying diapers and other low-cost items for his 6-month-old daughter from the popular online retailer, despite the website’s plan to collect sales tax in Pennsylvania starting on Saturday.
But Eid, 28, of Mars said he probably won’t buy bigger-ticket items from Amazon, such as the laptop computer and digital camera he bought online recently after looking at them in person at an electronics store.
“What’s the incentive now, if I can go to the store and come home with the product for the same price, rather than waiting two days?” he said. “For Amazon, they’re going to have to find a way to differentiate themselves again.”
Many regular Amazon shoppers on Thursday said adding the state’s 6 percent sales tax to online purchases wouldn’t change their buying habits. Amazon will collect Allegheny County’s extra 1 percent sales tax and Philadelphia’s extra 2 percent, state officials said.
The Department of Revenue on Thursday said it expects “substantial compliance” with its Saturday deadline requiring e-commerce companies with physical presence in Pennsylvania, such as a warehouse, to register and begin collecting sales tax.
“We’ve heard back from a number of retailers about their willingness to comply,” Department of Revenue spokeswoman Maia Warren said, though she would not name companies with which department officials are talking.
The department in December issued a tax bulletin to clarify the state’s sales tax-nexus law for remote sellers. It initially set a February compliance deadline. Businesses that don’t comply would face assessments, audits, liens or referrals to collection agencies or the state attorney general’s office.
Amazon.com Inc., the nation’s largest online-only retailer, this week reversed its stance on the directive to remit sales tax. Seattle-based Amazon has six fulfillment centers in Pennsylvania and collects sales tax on orders shipped to Kansas, Kentucky, North Dakota, New York, Texas and Washington. It plans to do the same with California orders starting Sept. 15.
“We believe that customers will continue to come to Amazon because we offer the best prices with or without sales tax,” spokesman Scott Stanzel said.
Natale Cozzolongo, 26, of Shadyside chooses Amazon for the selection, convenience, good prices and quick delivery when he buys books.
“These benefits outweigh paying sales tax,” he said. “I’m not necessarily happy to pay it, but I don’t see why there’s an exception” for online-only retailers.
Amanda Chase, 33, of Ross buys “everything from books to peanut butter” on Amazon and doesn’t expect sales tax will slow down her purchases.
“Their prices are lower to begin with,” she said. “The convenience outweighs almost everything.”
Others, such as Jeff Gross, said they will search out other online retailers that won’t collect sales tax.
“There’s taxes on taxes on taxes, and it’s never enough,” said Gross, 59, of Export. “As a consumer, I have to save money however I can.”
The Alliance for Main Street Fairness, with 800 member businesses in Pennsylvania, hailed Amazon’s decision as a step toward leveling the playing field between traditional retailers and online shops.
“It’s only fair, it’s only right,” Alliance spokesman Dan Hayward said. “Year after year, we have seen the online-only competition only getting more fierce.”
Though the alliance hopes other large retailers such as Overstock.com and eBay.com follow Amazon’s lead, an eBay Inc. official said Pennsylvania’s requirement doesn’t apply to the auction site that joins buyers and sellers.
Brian Bieron, senior director of government relations, said that “eBay is not a retailer. eBay is a marketplace that is used by shoppers, retailers and other sellers.”
Salt Lake City-based Overstock has no facilities outside Utah, said the company’s general counsel, Mark Griffin.
“If we had a warehouse or employees in Pennsylvania, we would collect sales tax on Pennsylvania sales,” he said, citing a 1992 Supreme Court decision disallowing states to collect from retailers with no physical presence there.
Pennsylvania has said it lost out on $345 million in sales tax collections last year because Internet and catalog sellers with no presence here don’t remit sales tax. The state collected $8 billion in sales tax last year, or about 32 percent of all tax revenue.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected]. The Associated Press contributed to this report.