The free ride is over for Floridian fans of Amazon.com. As of May 1, 2014, Amazon will begin charging sales tax on all orders in the state thanks to the opening of two new fulfillment centers in the state, and the average sales tax will be around 6%.
Amazon never charged sales tax in Florida previously because the Seattle-based online retailer had no physical presence in the state. In 1992, the Supreme Court ruled that states cannot require out-of-state retailers to collect sales tax and this is, consequently, why many online retailers only charge sales tax in one or two states where they've got brick and mortar or warehouse locations. Although the IRS has long required taxpayers to report any unpaid sales tax on items purchased online, this legal requirement has never been effectively enforced, and most consumers aren't even aware of the requirement. "Even if consumers do know, they often fail to comply because they assume no one else does," Bob Meighan CPA, a vice president with tax-software firm TurboTax, told NBC News in 2008. Although the NBC News story is now six years old, neither the law nor its lack of enforcement has changed.
Frank Mora of Ybor City told the Tampa Bay Times that the new Amazon sales tax will lead him to look elsewhere for the lowest prices. "It will definitely discourage me from using Amazon. The bottom line for me is what's going to be the least expensive.''
Bloomberg reported this week on a recent study by researchers at Ohio State University which showed that households reduce their spending at Amazon by 10% after sales tax is introduced in their states. "There is no ambiguity,” Brian Baugh, co-author of the study, told Bloomberg. “It has been their competitive advantage." Nonetheless, the new Amazon sales tax in Florida is expected to bring in an additional $70-80 million in annual revenue for the state.
Here is the list of the 21 states where Amazon currently collects sales tax:
You can read more about how Amazon calculates sales tax in these states here.