CHEYENNE – Amazon will begin collecting sales tax on purchases made by Wyoming customers beginning March 1, Gov. Matt Mead’s office announced Thursday.
According to a news release from Mead’s office, Amazon voluntarily agreed to start collecting the tax through an agreement with the state.
Amazon will collect both the 4 percent state tax and local option sales taxes, where applicable, Wyoming Department of Revenue Director Dan Noble confirmed.
“Wyoming businesses are at a disadvantage when internet businesses fail to collect tax,” Mead said in a statement. “This is an important step in the right direction. I encourage the Legislature to continue to work on the remote sellers bill.”
During his State of the State address Wednesday, Mead expressed support for requiring online retailers to collect sales tax.
Cheyenne Mayor Marian Orr released a statement after the Amazon agreement was announced.
“Small businesses aren’t asking for special favors,” she said. “But they do expect competition to be fair. This is a step in the right direction.”
It is not yet known how much revenue the Amazon agreement will generate for the state.
The bill Mead referred to – House Bill 19 – has been introduced in the Legislature and sent to the House Revenue Committee, which will consider the bill at 8 a.m. today at the Jonah Business Center, Room H36.
It would require large online retailers to collect sales tax from Wyoming customers, and the tax would be paid by the customer, not the retailer.
To be subject to having to collect sales tax under the bill, a business would have to conduct $100,000 in sales or 200 separate transactions in Wyoming annually.
That means businesses with small operations or that only occasionally sell to Wyoming customers would be exempt.
Enforcement of the law would be through the state Department of Revenue.
Supporters of the bill say such a law would even the playing field for businesses in Wyoming.
Wyoming could stand to gain between $23 million and $46 million annually if online sales tax were collected, the state Department of Revenue has said.
But at issue is whether a state can force a company that does not have a physical presence in the state to collect sales tax on purchases made to the state.
In 1992, the U.S. Supreme Court ruled in Quill Corp. v. North Dakota that retailers that did not have a physical presence in a state could not be forced to collect sales tax.
The case stemmed from the state of North Dakota attempting to force
Quill, an office supply company often associated with mail-order catalogs,
to collect North Dakota sales tax on purchases made by entities in North Dakota.
But that case was before the proliferation of the internet and online shopping.
Now, states have passed laws requiring online retailers to collect sales tax and some, including South Dakota, are in court cases seeking to resolve the issue.
Supporters of requiring online sales taxes were encouraged in December, when the Supreme Court refused to hear an appeal of a similar Colorado law, thereby letting it stand.
Earlier this week, Amazon agreed to voluntarily collect sales tax in South Dakota effective Feb. 1, according to the Argus Leader newspaper in Sioux Falls, South Dakota.
According to the Mead’s office, Amazon currently collects sales tax in 34 states.