In recent years, online retail giant Amazon has faced criticism and legal challenges over its failure to collect sales tax in certain states. While the company currently collects sales tax in all 45 states that have a state sales tax, there are still five states where Amazon does not collect sales tax. The purpose of this blog post is to explore which states Amazon does not collect sales tax and the impact this has on brick-and-mortar stores and state revenue.

States where Amazon does not collect sales tax

Alaska

Delaware

Montana

New Hampshire

Oregon

This means that residents of these states will not be charged sales tax on their purchases from Amazon, giving them a slight price advantage over residents of states where Amazon does collect sales tax.

However, it is important to note that even if Amazon does not collect sales tax on purchases made in these states, residents of these states are still technically required to pay a use tax on their purchases. The use tax is a tax on items purchased out of state and brought back into the state for use. However, this tax is often difficult to enforce and many residents do not pay it.

The use tax and how it applies to residents of these states

The use tax is a tax on items purchased out of state and brought back into the state for use, storage, or consumption. It is similar to a sales tax, but it is applied to items that were not subject to sales tax at the time of purchase. The use tax is intended to level the playing field between out-of-state and in-state retailers by ensuring that residents pay the same tax on items regardless of where they were purchased.

In states where Amazon does not collect sales tax, the use tax applies to residents of these states who purchase items from Amazon or other out-of-state retailers and use, store, or consume them within the state. For example, if a resident of Alaska purchases a television from Amazon and uses it in Alaska, they are required to pay a use tax on that purchase.

However, it is often difficult to enforce the use tax, and many residents do not pay it. Many states do not have a clear process for collecting the use tax, and it can be difficult for residents to determine the correct amount of tax owed and how to pay it. Also, the use tax is often seen as a voluntary tax, and many people are not aware of their obligation to pay it.

In conclusion, the use tax is similar to a sales tax, but it is applied to items that were not subject to sales tax at the time of purchase. It applies to residents of states where Amazon does not collect sales tax, such as Alaska, Delaware, Montana, New Hampshire, and Oregon, but it is often difficult to enforce and many residents do not pay it.