Amazon.com, Inc. (NASDAQ:AMZN), under heavy pressure from several U.S. states, will soon introduce a program to help third-party merchants comply with state sales tax laws.
CNBC has more details on the much-anticipated move:
Next year the company will begin collecting sales tax for its third-party merchants in its home state of Washington, according to an announcement made this week through an Amazon sellers forum.
Marketplace Tax Collection, the new service, will automatically “calculate, collect, and remit” sales tax for third-party merchants selling products to customers in certain states, Amazon said. Washington will be first because the state passed a law that goes into effect on Jan. 1, requiring all online marketplaces — like Amazon — to collect sales tax on behalf of its third-party sellers.
Previously, Amazon had collected state sales tax when applicable only for items it sold itself — not purchases made from third-party sellers. It left the burden of tax collection on the sellers themselves, most of which simply didn’t collect the necessary tax, which is typically required if the merchant has a physical presence in the home state of the buyer.
Other states are sure to follow Washington’s model, so this pilot program of sorts gives the e-commerce giant a head start on the issue before it’s required to roll it out elsewhere. U.S. states stand to collect billions in additional tax revenue due to the change.
Amazon.com, Inc. shares were unchanged in premarket trading Thursday. Year-to-date, AMZN has gained 50.25%, versus a 16.36% rise in the benchmark S&P 500 index during the same period.