As far as Internet sales tax and the modernization of nexus laws is concerned it appears that Arizona may take on a bigger role in the upcoming months. The American Booksellers Association (ABA) is again calling on the Arizona Department of Revenue to enforce current nexus laws and require Amazon to collect sales tax on sales to Arizona residents. According to a recent article, the ABA has previously asked why Amazon does not have to collect sales tax in Arizona when it has two distribution centers in Arizona. That they do not currently collect and remit sales tax does seem like a bit of a contradiction as one would think nexus was established but that is for the revenue department to decide.
A recent article in the New York Times on Amazon and their Arizona distribution centers renewed the ABA’s interest in the Amazon/Arizona nexus issue. Of course if it is ultimately decided that Amazon does have Arizona nexus based on the two distribution facilities there will be no impact on affiliates; removal of Arizona affiliates will not remove the nexus. But, if there is no action by the Revenue Department I think that it is only logical to assume that the next logical step is for the ABA and other organizations to push for new nexus laws that will target merchants with substantial affiliate presence. Once legislation is submitted and pending it is safe to assume that affiliates in Arizona will be proactively removed by several merchants.
Of course these are just my thoughts. To be clear, the only current action in Arizona is a campaign to push the Arizona Revenue Department to enforce a current law. This campaign action is going on in many states in others it is not needed.
Over the past few months, several states have been reported to being more aggressive in questioning the activities of out of state merchants. Missouri, Florida, Illinois, California and Utah are just a few of the states that appear to have stepped up their investigations; more and more merchants are receiving nexus questionnaires. These states are seeking to enforce current nexus laws. Some do not feel new legislation is necessary, they believe current laws are enough. In addition to monitoring new legislation it is critical for merchants to seek professional advice to ensure they are in compliance with current laws. Remember, the best long term solution is to collect the sales tax, although it’s not as simple as some may believe.
The next year will be a hectic one as we all try to keep up with states strictly enforcing current nexus laws and the states with pending legislation.
I hope we are ready.