SALT Report 3893 – Online retailer giant Amazon announced Friday afternoon it would no longer be tax-free for Iowans starting Jan. 1.
An Amazon spokeswoman told KCCI in a brief statement that “Amazon will be required to collect sales tax in Iowa beginning on Jan. 1, 2017,” making Iowa the 31st state in which orders made on amazon.com will include a sales tax.
Neighboring state South Dakota has already passed a law that requires businesses to collect sales tax after making a certain amount.
And part of the online lure for shoppers is knowing they don’t have to pay state sales tax, but when the “discount” disappears, it could mean smaller businesses benefit as shoppers flock to brick-and-mortar, small-town retailers, said Victoria Daniels with the Iowa Department of Revenue.
As more online consumers make bigger purchases through the site, they aren’t particularly excited about paying more. But the purchases will mean a bump in a general fund revenue from the increase sales tax revenue.
“We estimate anywhere in the range of $18 million to $24 million in sales tax would come in, and that’s conservative,” Daniels said.
Amazon has not yet clarified whether or not it will be required to collect state sales tax.
Last year, there were $2.6 billion in tax sales in the state of Iowa, and online sales are growing at a rapid rate.
But the change could also mean company officials are planning to build a warehouse in the area, which would trigger state law requiring retailers with a physical presence to collect state taxes on sales.
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