The tax behaviors of the American corporation Amazon have been investigated in China, Germany, Mongolia, Sweden, South Korea, France, Japan, Ireland, Singapore, Luxembourg, Italy, Spain, United Kingdom, multiple states in the United States, and Portugal. According to a report released by Fair Tax Mark in 2019, Amazon is the best actor of tax avoidance, having paid a 12% effective tax rate between 2010 and 2018, in contrast with 35% corporate tax rate in the US during the same period. Amazon countered that it had an 24% effective tax rate during the same period. The Fair Tax Foundation released a follow up report in 2025, and this again listed Amazon as 'the worst'.
Background
Proponents of forcing Amazon.com to collect sales tax—at least in states where it maintains a physical presence—argue the corporation wields an anti-competitive advantage over storefront businesses forced to collect sales tax. Amazon is under increasing legal and political pressure from state governments, traditional retailers and other groups because of its refusal to collect sales tax in 41 of the 45 states with a statewide sales tax (as of March 2017). Those states include several where Amazon has a clear physical presence via distribution centers and wholly owned subsidiaries.
Amazon says it would support a federal solution to the sales tax problem as long as such legislation was fair and simple. As of May 2011 legislation has been introduced in Congress to allow states to impose sales taxes on sales to their residents from out-of-state. Amazon has not stated a public position on the bill. Amazon's competitors say it is insincere. Similar legislation, called the Main Street Fairness Act, failed in committee in 2010. Several earlier versions of the bill also failed to advance. Amazon lobbyists met four times with members of Congress or their aides in 2010 regarding the Main Street Fairness Act. The company spent $100,000 on lobbying in 2010, although these expenses also covered other bills discussed at the same time. Amazon has increased political contributions to federal lawmakers. Amazon's political action committee spent $214,000 during the 2010 election cycle, double what it spent for the 2008 elections.
US legislation Many U.S. states have passed online shopping sales tax laws designed to compel Amazon.com and other e-commerce retailers to collect state and local sales taxes from its customers. Amazon.com originally collected sales tax only from five states as of 2011, but as of April 2017 collects sales taxes from customers in all 45 states that have a state sales tax and in Washington, D.C. Amazon also collects sales tax on orders delivered to customers in specific localities in Alaska as well as certain textbook rentals sent to customers in Delaware.
Amazon does not collect sales taxes from Montana, New Hampshire, and Oregon, since those states do not have state sales taxes. Additionally, approximately half of all Amazon.com purchases are sold on the Amazon Marketplace through 3rd-party vendors, and these purchases remain free of tax except for in Washington state, where these purchases (starting in 2018) are now taxed.
The practice of not collecting sales tax on purchases due to lack of a physical presence ended in 2018. On April 17, 2018, The United States Supreme Court heard the case of South Dakota v. Wayfair, Inc., and issued its decision on June 21, 2018. A five-justice majority overturned Quill Corp. v. North Dakota, ruling that the physical presence rule decided in Quill was "unsound and incorrect" in the current age of Internet services.
Alabama's law also allows them to lock in the 8 percent rate even if the federal government adopts a higher figure in the future. The tax applies to all sales regardless of where they are shipped in the state. Furthermore, if sellers paid on time, they would be able to keep 2% and only remit 6% to Alabama. As a condition of joining the program, sellers agree to maintain records of all sales into Alabama, including purchaser name and address as well as purchase amount and taxes collected. Then, on January 1, 2016, new rules promulgated by the Alabama Department of Revenue required any out-of-state sellers doing more than $250,000 in sales to Alabama residents would be required to collect sales tax. This appears to be in contradiction to Quill Corp. v. North Dakota.
As of November 1, 2016, Amazon started collecting state sales tax by participating in Alabama's Simplified Use Tax Remittance Program, joining over 50 other retailers that had joined the program.
Alaska Amazon does not collect a statewide sales tax. As of January 1, 2019, Amazon collects local sales tax for orders delivered to specific localities within the state.
Arizona On October 26, 2012, Amazon reached an agreement with the Arizona Department of Revenue to pay $53 million to settle unpaid sales taxes. Furthermore, effective February 1, 2013, Amazon agreed to begin collecting sales taxes for goods sold to Arizonans. Furthermore, on July 1, 2013, Amazon would also begin collecting sales tax on digital products or services, like books. Amazon only agreed to collect the 6.6% state sales tax, but there was no requirement to collect local sales taxes, which can bring total tax close to 10%. This was an agreement between Amazon and Arizona, which mainly centered on Amazon's tax obligations because it maintains warehouses in Arizona. Arizona does not have a state law forcing other online retailers to collect sales tax if they do not have a physical nexus in Arizona.
Arkansas In 2011, Arkansas passed a bill requiring Amazon to collect sales tax. The bill took advantage of Amazon's use of affiliates based in Arkansas to establish the necessary physical nexus. Amazon responded by terminating the contracts of its Arkansas-based affiliates effective July 24, 2011. As of March 1, 2017, Amazon will be charging Arkansas residents sales tax after legislation was being moved to collect sales taxes from online retailers. Whether Amazon collects local sales taxes is unclear. Arkansas is currently considering two bills that would require online retailers to collect sales tax (SB 140) or notify Arkansas residents that they owe sales taxes to the Arkansas government (HB 1388).
In April 2017, Amazon began collecting sales tax in the state.
California
In 2009, California representative Nancy Skinner pushed legislation to tax online sales that was approved as part of the state budget. Gov. Arnold Schwarzenegger vetoed the legislation. On January 19, 2011, Skinner introduced similar legislation in the form of AB153 that later became law. The bill required out-of-state online sellers with affiliates in California to collect sales tax on purchases made by state residents. The affiliate provision was included to ensure that only sellers with a California nexus are taxed, as required by federal law.Russian investment gives Plastic Logic flexibility, by Andrew S. Ross, The San Francisco Chronicle, January 19, 2011 "This legislation will close the current loophole in tax law that has allowed out-of-state companies to avoid collecting California sales and use tax," stated Skinner. Skinner estimated that AB153 could produce between $250 million and $500 million per year in new revenue. She and other supporters of the bill believe that the election of Jerry Brown to the governorship and support from retailers such as Barnes & Noble will help the measure become law.Major retailers back bid for 'Amazon tax' , by Kevin Yamamura, Sacramento Bee, January 20, 2011
In 2011, Amazon threatened to terminate roughly 10,000 of its affiliates located in California if legislation pending in the state legislature to deem such affiliates as constituting a nexus that requires the collection of sales tax is passed. California affiliates would no longer receive commissions on referrals to Amazon. As of March 2011, four bills are pending in the state legislature that would define the use of associates located in California-* for sales referrals as activity subject to taxation by California. In a letter addressed to California's Board of Equalization, the agency responsible for collecting sales taxes, Amazon called such legislation "unconstitutional" and said it would terminate its California affiliates if passed. "If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon 'Associates Program,'" wrote Paul Misener, Amazon's vice president for Global Public Policy.
Responding to Amazon, Nancy Skinner said, "This is really about e-fairness. It's really to be fair and show our California Businesses that we're not hanging them out to dry." According to the American Independent Business Alliance, the corporation has operations in at least seven California cities and should be forced to collect sales tax regardless of its threats.
In July 2011, Amazon made good on its promises to terminate California affiliates. According to the Performance Marketing Association, there were 25,000 Amazon affiliates based in California. However, on Amazon's website, under "United States Subsidiaries," listed are four California locations for A2Z Development Center Inc. - "an innovative customer-centric software development company" - including in San Francisco and Cupertino, where the Kindle was designed; a search engine company called A9.com in Palo Alto; and, in San Francisco, Alexa Internet, another Amazon search company.
Due to its opposition to rules that would require the company to collect sales tax, Amazon.com is facing a boycott from a coalition of California non-profits. One of the groups behind the boycott, Think Before You Click CA, says improved sales tax enforcement will bring in $200 million per year in additional revenue and encourage people to shop at local traditional retailers instead of online.
Compromise with Amazon.com In response to resistance from Amazon.com, other online retailers, and anti-tax groups, the State of California agreed to a delay of one year before requiring online retailers to begin collecting sales tax on sales to California addresses. In return for the one-year delay, Amazon.com says it will create 10,000 full-time jobs, 25,000 seasonal jobs, invest $500 million in various facilities in California over the next few years, and begin remitting sales taxes on orders shipped to California. California began collecting sales taxes on September 15, 2012, and the rate will depend upon where the buyer is located. However, this requirement may not apply to third-party sellers on Amazon.
Colorado In response to HB 10-1193 passed in 2010, Amazon terminated its relationship with all affiliates located in Colorado. The bill originally sought to tax sales to Colorado residents by online retailers with Colorado affiliates. The bill was amended to remove all reference to affiliates in order to discourage Amazon from cutting ties with them. The final bill required large online retailers to either remit tax on sales to Colorado residents or provide information on Colorado customers to the state. In spite of this move Amazon still decided to terminate its Colorado affiliates.
Amazon began collecting sales tax in Colorado on February 1, 2016. On February 23, 2016, the Federal 10th Circuit Court of Appeals court upheld the law against a legal challenge by the Direct Marketing Association. Ruling Judge Neil M. Gorsuch contended that overturning the law would create a statewide "tax shelter" for online retailers. Following the ruling, policy experts predicted that the decision could lead to a unified push for national internet sales taxes. It is unclear whether or not Amazon collects local taxes.
Connecticut