Amazon Now Has to Charge Sales Tax in Maryland

amStates are lining up to begin requiring web retailers to collect taxes in states where the retailers have a “physical” presence. Florida was recently the 21st state to require Amazon to collect sales tax, a move that will reportedly net $80 million in revenue. Of late, Maryland is the 22nd state to make similar moves.

The reason for the move is that Amazon will soon have a large presence in the state of Maryland. In the past few months, Amazon announced that it will be building a second major warehouse in Baltimore’s south east industrial park area. The first warehouse, expected to have 1 million square foot, has been under construction for some time.

So, what are the major fallouts here? One of the biggest issues that market strategists worry about is the tax-related compliance burden the law now places on small businesses that sell goods through the giant retailer. Like Ebay, Amazon and many other ecommerce models are comprised of sell-it-yourself third-party interfaces where consumers buy a product from another company through Amazon’s website. For all practical purposes, this means that the seller must calculate the amount of tax on the product.

Amazon’s website offers a bit of insight as to how products on their site are priced: “The amount of tax charged on your order will depend upon many factors including Identity of the seller, type of item purchased, and destination of the shipment. Factors can change between the time you place an order and the time of credit card charge authorization, which could affect the calculation of sales taxes. The amount appearing on your order as Estimated Tax may differ from the sales taxes ultimately charged.” If it sounds complicated, it’s because it is.

Thankfully, there are digital services to help counter the complexity of what digitalization has generated. Avalara is best understood as the Turbo Tax for sales compliance, constantly collecting and updating state and national compliance regulations and making it easy for those small businesses to, once again, sell their products in an online marketplace. But for a price, of course.

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