Seattle-based Amazon was the target of a tweet by President Trump on Wednesday morning.
The president wrote: "The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!"
The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!
— Donald J. Trump (@realDonaldTrump) June 28, 2017
KING 5 set out to verify the president’s assertion that Amazon doesn’t pay “internet taxes.”
SOURCES
KING 5 consulted Adam Ozimek, a senior economist at Moody's Analytics; John Buhl, who works for a DC-based think tank called the Tax Foundation; and Kim Reuben with the Urban Institute's State and Local Finance Initiative. Also consulted was the part of Amazon.com’s website that discusses how the company handles sales taxes.
ANALYSIS
When it comes to "internet taxes," the three policy experts who spoke with KING 5 all said no business is taxed for using the internet. But President Trump could have been charging that Amazon is not collecting state sales taxes on the products it sells.
That's been a contentious issue since the late 1990s, when businesses began doing large volumes of sales online.
States don’t want people to be able to evade sales taxes by buying online. While Amazon’s record on collecting state and local sales taxes was spotty in the World Wide Web’s early days, the experts KING 5 spoke with – as well as Amazon's own website – say the company currently collects taxes in the 45 states that have sales taxes.
According to the Tax Foundation’s Buhl, "In the last few years, states have been more aggressive in trying to get Amazon—given its size in e-commerce—to collect sales taxes. In addition, Amazon has expanded its distribution network (i.e., building warehouses/delivery centers in more states), which creates the type of (physical) presence that legally requires it to collect taxes."
Amazon says it does not collect sales taxes in states that don't have them: Alaska, Delaware, Oregon, Montana and New Hampshire (although the company does note some exceptions with items subject to local taxes in Delaware and Alaska).
Washington is one of the states Amazon says falls under its sales tax collection policy. Sure enough, one KING 5 employee looked up an order receipt showing that a book purchased for a friend in Kentucky had $1.22 of sales tax applied to the total. But the same employee bought other products that did not have sales taxes collected on them. For example, a box spring mattress cover bought for $22.99 had no sales tax applied.
The experts KING 5 spoke with pointed out that Amazon does a lot of business with third-party sellers, and the company doesn't necessarily apply sales taxes for those other vendors. The company says sales tax information for those sellers can usually be found in the seller's Shipping and Tax Information section, usually found by clicking a seller’s name from the Amazon product page.
CONCLUSION
Was the president right to say Amazon doesn’t collect "internet taxes?" Simply put, no. There’s no blanket "internet tax," but when it comes to sales taxes, Amazon collects those funds on most purchases made in most states.
If the president was referring specifically to third-party sellers who list products on Amazon, he would have a point, as the buying history of one of our employees shows.
