SANTA FE, N.M. — New Mexico has little chance of cashing in on a windfall of tax revenue from Internet sales giant Amazon, despite other states’ success in getting the company to collect sales taxes, a tax expert says.
Unless Congress acts to change federal laws, none of the factors allowing other states to collect taxes affect New Mexico, Richard Anklam of the New Mexico Tax Research Institute’s told the Santa Fe New Mexican.
Pennsylvania, Texas, Washington, Kansas, New York and North Dakota are collecting sales taxes on their residents’ Amazon purchases. California will begin receiving money from sales beginning Saturday. Even more states will begin collections in 2013 and 2014.
The legal standard for an Internet sales company be required to collect sales tax is that a firm has to have a physical presence or a “nexus” in a state. That may mean something different in each state, and what constitutes a “nexus” is open to legal interpretation.
In California, Gov. Jerry Brown has maintained that a presence in the state includes marketing affiliates. Amazon decided to pay the tax to avoid losing a court decision that might have included owing back taxes for several years.
Anklam said the Internet tax debate has brought small local businesses, which see an unfair competition from Amazon and other online sellers, to unite with state governments, which want a broader tax base to weather downturns.
The disparity is even greater for businesses in Santa Fe, where there is a higher gross-receipts tax than elsewhere in United States, Anklam said.
That is why many are hoping the issue is resolved in Congress, where several bills are aiming to apply consistent laws to online retailers that can be enforced across the country.
“There is more interest than ever, because the states are all hurting for money and the local businesses have a competitive disadvantage,” Anklam said.