I have written before about the complexities of interstate taxes here. Obviously, one of the big fish in the internet sales pond is Amazon. It recently came out that Amazon will now start collecting sales tax on its sales in Ohio. Articles here and here.
Interestingly, Amazon is “voluntarily” paying the sales tax. It is not recognizing that it is required to pay the income taxes based on any sort of nexus to Ohio. It appears this came about through a quid-pro-quo related to Amazon opening a data center in Columbus suburbs. See that press release here. Cleveland.com is reporting that Amazon is getting some tax breaks for this data center, which could explain the quid-pro-quo of collecting sales tax.
It certainly would have been more legally interesting if Ohio tried to go after Amazon for sales taxes based solely on the presence of data centers. It is clear that a warehouse would qualify Amazon for nexus status, but it is not clear if a data center would. I can certainly imagine an argument that Amazon is selling actual physical goods – even if only 1s and 0s – that are located in Ohio if it has a server farm here. I guess we’ll just have to leave such arguments to the imagination, although I’m sure Ohio is happy about the extra $150-300 million in taxes that Amazon will deliver to the state.
If you have any questions or would like to talk to me about interstate taxes, please contact me at 216-574-4814 or pat@dfinleylaw.com.
Disclaimer: This blog is for informational and educational purposes only. The legal information provided in this blog is for general information only. It does not constitute legal advice, and should not be construed to create an attorney-client relationship. Readers should always contact an attorney before acting.
