In less than 48 hours, online retailer Amazon.com will start charging Texas sales tax on products you buy from its site.
Texas will become only the sixth state to charge sales tax on Amazon purchases. The switch comes after an agreement was made between the Texas Comptroller’s office and the online retailer. In 2010, the comptroller’s office claimed Amazon owed the state $269 million in uncollected sales tax. Under the new agreement, Amazon will create at least 2,500 jobs in the state and will also bring at least $200 million in capital investment.
For many brick-and-mortar operations the move will level the playing field. Jason Brewer is with the Retail Industry Leaders Association, a national trade group.
“This gives every retailer whether you’re big, whether you’re small, whether you’re online, or whether you’re on Main Street, gives everyone the same set of rules to play by," Brewer says. "And ultimately that’s good for business and good for the consumer.”
Brewer says the action in Texas serves as a template for other states and the rest of the nation. But Raj Raghunathan with the McCombs School of Business says customers won’t be happy about it.
“The negativity that arises from the fact that they know that the price is higher than what they could’ve paid or would’ve paid in the past can be negative enough, can be intense enough for them to actually not want to shop online.”
Amazon already collects sales tax in Kansas, Kentucky, New York, North Dakota and Washington. Sales tax collections are on the horizon for several other states including Nevada and New Jersey.
Sales tax collections in Texas begin on Sunday.