Many Tennessee residents received an email from Amazon Tuesday Jan. 28 regarding Tennessee sales and use tax on products purchased during 2013.
Until recently, Amazon has not been adding the state sales tax to purchases for Tennessee residents.
In Tennessee, when a resident purchases a product and has it mailed to the state, the product is subject to sales and use taxes.
Tennessee.gov defines sales tax as being “imposed on all retail sales, leases and rentals of most goods, as well as taxable services.” The website defines use tax as the counterpart to sales tax. This applies when a product is purchased outside of and shipped into Tennessee.
It is required by law for online customers to report and pay their respective state sales taxes on any online purchases that do not include the sales tax.
Former Gov. Phil Bredesen had previously made an agreement with Amazon to make the customers responsible for paying the sales tax on their own in order to release Amazon from the responsibility of collecting state sales tax, according to The Tennessean.
However, most customers have failed to do this and states have been losing millions of dollars of revenue every year. Amazon has been negotiating with states individually to compromise on the sales tax issue while waiting for federal legislation to settle the issue nationally, according to CNN.
Most customers were unaware of the sales tax, or lack thereof, on Amazon. So, it was a surprise to many to receive the email.
According to The Tennessean, in 2011, Gov. Bill Haslam made a deal with Amazon that delayed the sales tax charge until 2014. The deal provided for thousands of jobs to be brought to Tennessee by building new Amazon distribution centers.
Now that it is 2014, the sales tax has been put into effect on Amazon. Tennessee customers will see a price increase of at least 9 percent on their final cost. This percentage includes the sales and use taxes.
The tax could provide up to $17 million to the state every year, according to Fox News.
Amazon is also applying sales tax to Nevada and Indiana residents beginning this year. According to CNN, the revenue from all three states’ sales tax could be over $50 million a year.
The opinion has been varied when it comes to the recent sales tax addition on Amazon. Many students at UTM were confused about receiving the email.
“I thought it was a scam. It just seemed weird that Amazon would email me about it instead of using snail mail. Anything asking for money in an email seems fishy,” said Jordan Sims, a senior Marketing and Management major.
Other students believe the request in the email is no longer relevant because of timeliness.
“I just didn’t understand why it was about last year. That doesn’t seem relevant to me anymore,” said Lars Harper, a sophomore Public Relations major.
Harper is not alone in thinking the email is irrelevant. However, there is a chance that customers who do not pay the tax may face penalty or interest, according to the Nashville Ledger.
With tax season quickly approaching, it is important to realize the sales and use taxes are not the same as the income taxes that you will file. However, it still is something for buyers to pay attention to.
“Everyone should definitely follow the email’s directions and pay the listed amount on https://apps.tn.gov/usetax,” said Tawly Richardson, a senior Accounting major.
