Online sales tax collection poses challenges for Pennsylvanians
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As giant pioneering online retailer Amazon begins collecting Pennsylvania sales tax, savvy shoppers might want to double-check that the tax is being applied correctly.
For example, a pair of shoes recently purchased from the Amazon Marketplace included $1.68 in sales tax. Problem is, shoes aren't taxable in Pennsylvania. After an email was sent complaining about the charge, the tax was promptly refunded.
Amazon spokesman Scott Stanzel said Wednesday the purchase likely involved one of about 2 million third-party retailers that use the Amazon platform. Those third-party sellers are responsible for correctly applying sales tax on their products, he said.
Asked how customers can be assured that Pennsylvania sales tax is being charged correctly when shopping with Amazon, Mr. Stanzel said the company has had a lot of practice.
"We collect sales tax, or the equivalent, in more than half the areas where we do business," he said. "Business is thriving in those areas."
Amazon started charging the state's 6 percent sales tax (plus an extra 1 percent on goods purchased by shoppers in Allegheny County) on Sept. 1 after the Pennsylvania Department of Revenue set that deadline for retailers to comply with a decades-old law -- long ignored by many e-commerce businesses -- that requires companies with a physical presence in the state to collect sales tax. Seattle-based Amazon has a half-dozen distribution centers in Pennsylvania.
The revenue department signaled it was stepping up enforcement of online retailers with a regulatory bulletin issued in December warning that businesses that ignored the deadline could be audited and required to pay at least three years' worth of back taxes.
"We wanted businesses to realize that as of Sept. 1, if they did not comply," they would face "escalating enforcement actions," spokeswoman Maia Warren said.
The state estimates that compliance by Amazon and others will bring in an additional $43 million during the current fiscal year.
Ms. Warren wouldn't identify any businesses besides Amazon that pledged to start collecting sales tax since the bulletin went out, citing taxpayer confidentiality.
"We're encouraged by significant compliance," she said.
The state was looking for ways to crack down on scofflaws as a matter of fairness, Ms. Warren said. "The Department of Revenue wanted to enforce the existing tax laws fairly with regards to all businesses," she said. "We're working to ensure that e-commerce companies don't continue to have an unfair advantage over brick-and-mortar stores."
In Pennsylvania, most food, clothing and medicines are exempt from sales tax.
Many other types of goods that are increasingly being purchased online are taxable, including major categories such as cosmetics, jewelry, purses and wallets, soaps and shampoo, paper goods, pet food, hardware and tools, rugs, linens, cookware, dinnerware, furniture and appliances.
Consumers who believe sales tax has been misapplied by a retailer and are unsuccessful at getting a refund should contact the revenue department's board of appeals for help at 717-783-3664, or www.boardofappeals.state.pa.us. Save any receipts showing the amount of sales tax in question.
For an explanation of Amazon.com's tax collection policies, visit www.amazon.com/gp/help/customer/display.html?nodeId=468512&. A list of taxable and nontaxable items in Pennsylvania is available at www.revenue.state.pa.us.
First Published September 7, 2012 12:46 am