If you’re like me, you always check on Amazon before deciding on buying anything in the stores. You can count on Amazon’s price to be comparable to the store prices.
Most of the time, it’s just so much more convenient to buy it on Amazon, and have it be at your door in 2 days or less with free Prime shipping.
One lesser benefit that people don’t talk about is that alot of times, there is no Sales Tax on Amazon, while there is always sales tax in stores. This could save you a few more dollars.
There are many times I bought items on Amazon and paid no sales tax, while other times there is. You’ve seen this too, and have probably wondered why.
Most states have sales tax, some cities and counties also have additional sales tax on top of the state sales tax.
For example: San Diego county have a county wide sales tax of 7.75%, while cities of Vista and El Cajon sales tax is at 8.25%. La Mesa pays 8.5%!
Am I Responsible for Paying Sales Tax?
Sales tax collection on Amazon is the responsibility of the seller of the item. Amazon sells a lot of the items on Amazon.com, but a majority of items are sold by 3rd party sellers.
For the 3rd party sellers to collect sales tax, they need to register with Amazon, the state and locale where they wish to collect sales tax.
Many 3rd party sellers are not registered to collect sales tax in every state. So if you buy an item on Amazon from a 3rd party seller that hasn’t registered for sales tax in your state and locale, you don’t pay for it!
This is something that is kind of a loop-hole in the Amazon system, and many consumers are taking advantage of it without realizing it most of the time.
How sales tax are calculated on Amazon:
The price listed on an Amazon page is the pre-Tax price. The sales tax is only calculated based on tax rate of the location the item is shipped to.
Most people select the default offer Amazon provides, and find out the amount of tax right before checkout, when shipping is calculated.
But you can find out what other offers there are for a product and the expected sales tax for an item ahead of time, by clicking on the “Other offer” link. The sales tax is calculated based on the default shipping address on your account.
When there are multiple offers for the product, Amazon will usually make the default offer the lowest price one.
But the sales tax you pay is not considered in Amazon’s algorithm when deciding which offer is the lowest price one. When you choose an item to buy, the frugal shopper in you should take sales tax into your buying decision.
You can see for this backpack that, Amazon is the default offer at $54.99, and charges $4.26 of sales tax. But you can see JCCorner’s offer also at $54.99 has no sales tax. Both offer Prime shipping, and is the identical product.
If you click the “Add to Cart” button under JCCorner, then buy it instead of the one being sold by Amazon, you’ll end up saving $4.26 on this backpack.
This method won’t work for all items, as not all items have multiple offers at the same price while also offering Prime. If you make a habit of checking other offers on Amazon, you can sometimes save a few $’s with an extra couple of clicks.
Will your state come after you for sales tax you didn’t pay?
As mentioned previously, the seller of the item is responsible for the sales tax. If the state were go after the unpaid sales tax, they will go after the seller, and not you, the buyer.
According to sba.gov
“If your business has a physical presence in a state, such as a store, office or warehouse, you must collect applicable state and local sales tax from your customers. If you do not have a presence in a particular state, you are not required to collect sales taxes.”
If the 3rd party seller does not have a physical presence in your state, he will be exempt from sales tax. However, there is some debate for 3rd party Amazon sellers, that have goods in an Amazon fulfillment center, but do not have a physical presence in the state, whether he needs to collect state tax or not.
You can sometimes find items on Amazon that have competitive priced offers but without the sales tax. I would try to take advantage of this and save a few dollars now if you can. Amazon may be changing the rules on this in the future, and they might force all sellers to collect sales tax.