2

I have been purchasing products from Amazon in the US.
What I see that they don't charge any taxes when I purchase.

Recently I purchased a product from BestBuy that had sales tax and I got the same product I from Amazon and there was no sales tax.

I don't understand the system.

I live in New Mexico.

Improve this question

1 Answer 1

Reset to default
7

In the United States the sales tax regulations are done by the state (though some sates do allow cities or counties to piggy back on those taxes).

Regarding online sales, a vendor like Amazon maybe required to collect and forward to the state sales tax depending on:

  • does the state tax online sales.
  • does the state only require sales tax if the vendor has a presence or Nexus in the state.

As of now New Mexico uses the Nexus test, and Amazon doesn't have one in the state. So they don't collect sales tax.

If you go to a brick and mortar store in New Mexico they will collect sales tax, unless the item falls into a category that is tax free.

There have been calls for the US congress to pass a law to make online sales not depend on the determination of having a Nexus.

Improve this answer
2
  • 2
    Many states have a "Use Tax" which taxes items bought out-of-state, by what used to be mail-order but now has morphed through phone order to online on which no state sales tax has been paid, usually at the same rate as the sales tax rate. This gets around the Constitutional prohibition against states taxing interstate commerce on the grounds tha the state is taxing your use, not your purchase of the item. The Supreme Court has held use taxes to be constitutional. Use taxes are often "collected" via a form attached to the State 1040 form, but enforcement is often quite casual.
    – Dilip Sarwate
    Commented Nov 3, 2016 at 14:04
  • +1. Even the "nexus" test is often not clear-cut, and in practice it can depend on how aggressive the state government is in trying to compel online retailers to collect sales tax. About 5 years ago it appeared Amazon was gearing up for a battle royale with the California government over this issue. In the end, they apparently decided it wasn't cost-effective and did a complete 180, instead doubling down on their "nexus", opening several distribution centers in the state, and beginning to collect the sales tax.
    – BrenBarn
    Commented Nov 4, 2016 at 6:41

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .