APPRO and CERRON Blog

Sales Tax—Should Amazon/Online retailers pay sales tax in Minnesota?

Written by Roz Peterson | Jan 16, 2012 12:50:44 PM

The holidays are passed and as I await the dreaded visa bill I reflect on how my own shopping patterns have changed. Last year I bought nearly everything at CVS. There were no lines, ample parking, friendly service and everything was wonderful. This year we went online to find our purchases which were mostly electronic for our teenage children from our cabin in Hayward, WI. By law we are responsible for the sales tax we incur for online purchases. The online retailers that do not have a physical store where we legally reside are not responsible to collect sales tax, although the consumer is still responsible to collect and submit on their tax return. As more and more consumers switch to online purchases, the state loses the revenue normally collected in the past. Consumers are not used to submitting sales tax outside the transaction and they shouldn’t be expected to do so. Brick and mortar retailers like Target, Best Buy and others are at a disadvantage to pay the additional income tax, property tax and capital to occupy prime retail space while Amazon’s prices are typically 7% less—the amount of sales tax collected. The argument against is it is tough on the mom and pop retailers to figure out all the different taxes. One tax rate per state would simplify this issue. Electronic submission and withdrawal would make it easy to implement. The proposed affiliate nexus legislation; Internet Sales Tax Fairness bill would provide $3.5 million in lost sales tax revenues to Minnesota. There are also initiatives being talked about at the Federal level as well that are supported by the International Council of Shopping Centers (ICSC).

Not only would this create a level playing field for retail competition, but would also provide lost revenue at the state legislature.