The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
Amazon now taxes Va. buyers
If you’ve shopped on Amazon in the past week, you’ve paid a little bit more money for your item than you did in the past because of a tax that could expand to other online retailers.
Amazon, under a 2012 agreement with Virginia, started on Sept. 1 to collect sales tax on items bought by Virginians.
That agreement is separate from a provision in this year’s transportation bill that will raise the state’s gas tax from 3.5 percent to 5.1 percent in 2015 if federal lawmakers don’t pass a nationwide law requiring online retailers to collect sales tax.
So even though you’re paying online sales tax to at least one company now, Virginia hasn’t settled the issue.
States have been pushing for years for online retailers to collect sales tax. Many of those states, like Virginia, have laws that don’t require retailers to collect sales tax if they don’t have a physical presence in the state.
That means if you buy something online from, say, Best Buy, the company will charge you the sales tax and remit it to the state because the company has stores here.
But Amazon and many other online retailers do not have Virginia stores.
It was when Amazon decided to build distribution centers in Virginia that lawmakers began to push the retailer to collect Virginia sales tax. The bill requiring the company to do so passed in 2012 with the agreement of Amazon, and gave the company until this past week to start those tax collections.
But that agreement applies only to Amazon and any other out-of-state online retailer that builds a distribution center in Virginia.
Various bricks-and-mortar stores and coalitions of business groups have been pressing for a federal law to require all large online retailers to collect state sales taxes. States want that to happen because they miss out on millions of dollars in tax revenue through online purchases.
When Virginia’s Amazon bill passed last year, it was estimated that the state and local governments could get up to $24 million a year in additional tax revenue.
If sales tax on all Internet sales—or at least those at larger companies, as is proposed in various versions of federal legislation—were collected, Virginia estimates it could receive about $250 million in fiscal year 2014, and up to $320 million by fiscal year 2018.
The state is counting on those Internet tax dollars to help pay for the transportation bill passed earlier this year by the General Assembly.
The bill, proposed by Gov. Bob McDonnell, specifically directs some of those online sales tax dollars to transportation and others to education.
But that depends on Congress approving a federal bill requiring online retailers to collect state sales taxes—something that’s far from done. The Senate passed a bill earlier this year, but the House has not.
If a bill doesn’t pass by January 2015, Virginia’s gasoline tax will go up.
The transportation bill converted the state’s gas tax from a per-gallon tax of 17.5 cents to a 3.5 percent wholesale sales tax.
If Congress fails to pass a federal bill to collect online sales taxes, the state gas tax will rise to 5.1 percent.
Chelyen Davis: 540/368-5028