'Amazon Laws' and Taxation of Internet Sales: Constitutional Analysis [April 3, 2013]   [open pdf - 266KB]

"As more and more purchases are made over the Internet and states experience more and more fiscal distress, states are looking for new ways to collect taxes for sales generated online. There is a common misperception that states cannot tax Internet sales; however, the reality is that they may impose sales and use taxes on such transactions, even when the retailer is outside of the state. However, if the seller does not have a constitutionally sufficient connection ('nexus') to the state, then the seller is under no enforceable obligation to collect a use tax. The purchaser, on the other hand, is still generally responsible for paying the use tax, but the rate of compliance is low. Recent laws, often called 'Amazon laws' in reference to the large Internet retailer, represent fresh attempts by the states to capture taxes on Internet sales. States enacting these laws have used two basic approaches. The first is to impose the responsibility for collecting use tax on those retailers who compensate state residents for placing links to the retailer's website on the state residents' websites (i.e., online referrals or 'click-throughs'). The other is to require remote sellers to provide information about sales and taxes to the state and/or the in-state customers. New York was the first state to enact click-through legislation. Colorado was the first to pass a notification law. These laws have received significant publicity, in part due to questions about whether they impermissibly impose duties on remote sellers who do not have a sufficient nexus to the state."

Report Number:
CRS Report for Congress, R42629
Public Domain
Retrieved From:
Via E-mail
Media Type:
Help with citations