Tuesday, May 1, 2012

Amazon.com and the Use Tax Letter

Good afternoon everyone!

By now many of you may have received (or know someone who has) an email from Amazon.com regarding Tennessee Use Tax on your purchases.  The email looks something like this:

Hello from Amazon.com,

Thank you for being a loyal customer of Amazon.com LLC.  We appreciate your business and look forward to continuing to provide you vast selection, low prices, fast delivery and convenience.

As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee.  However, the state of Tennessee requires us to provide the following notice to you:

You may owe use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the calendar year unless an exemption exists under state law or you have already paid the tax. A sale is not exempt under state law because it is made through the Internet. The total sales price of purchases you had shipped to Tennessee in 2011 was $193.86. This is the amount that you may include on your Tennessee use tax return to calculate the appropriate use tax owed unless you have already paid the tax.

As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.

Total sales from
www.amazon.com $XXX.XX
(Other sites related to Amazon may be listed as well)

In addition, the state of Tennessee requires us to provide you with the following link that you can use to get more information and pay any taxes due:

Use Tax Page:
Please note the following:

• While Amazon.com LLC does not report this information directly to the state of Tennessee we are required to provide this information to you based on Tennessee Code T.C.A. § 67-6-5 (f)(3) signed into law March 23, 2012.
• This notification has been sent to all customers that had purchases delivered to Tennessee. If you are not a resident of Tennessee, the most common reason for receiving this notification is that you may have sent a gift to a recipient in the state.

For more information you may also view our Tennessee Use Tax Notification Page at:

So the first question you may have is, "is this a scam"?  Well, unfortunately it's not.  As part of their locating distribution facilities to Tennessee, Amazon will start reporting (and collecting) sales tax on purchases made through their site sometime in the near future.  However, under long-existing Tennessee law, any item you purchase online through sites such as Amazon, EBay, etc.  Of course compliance is voluntary (meaning you had to voluntarily go to the TN Revenue website, file the return and pay the money).  However, since it was voluntary compliance, most people ignored it.  Since the state realized that they're losing more and more sales tax revenue to Internet purchases, consider the Amazon move the first in a long line of changes in the way e-commerce is handled for sales tax.

They say there's no such thing as a free lunch, now Amazon just helped confirm that.

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