SALT LAKE CITY, Utah (ABC 4 Utah) – If you plan on buying from Amazon next year, prepare to pay some sales tax. That is because the major e-commerce retailer and the Utah State Tax Commission recently struck a deal.
Starting January 1, Amazon shoppers in Utah will see some additional fees at checkout. While the new agreement is met with criticism among some consumers, state officials say it is meant to “level the playing field” and give millions of dollars of lost revenue back to Utah.
“Right now, the law requires us as taxpayers… to pay that sales tax. It’s called the ‘Use Tax,’ and that is done on the Income Tax Form where you declare how much sales tax you owe…” said Charlie Roberts, spokesperson for the Utah State Tax Commission. “Obviously, there’s a very small percentage of people that actually do that,” he explained.
The self-reporting honor system for online sales tax is not working in the Beehive State and really never has, according to Roberts. In fact, Governor Gary Herbert says the state loses as much as $200 million in unreported e-commerce sales taxes every year, and the number is only climbing as more people shop online.
The new agreement allows Amazon to collect a 4.7 percent sales tax from Utah customers on behalf of the state, plus whatever local taxes apply in the city or town where a shopper made a transaction.
The move is now sparking mixed reaction among Amazon shoppers — some are even threatening to buy elsewhere.
“That’s going to really effect my use of Amazon, honestly, so I probably won’t use it as much, if at all,” said Jaren Dixon, a Utahn who used to shop on Amazon on a weekly basis.
“I think it’s good that we are being taxed here in Utah. It’s good to save the money on sales tax, but at the same time, [the tax money] comes back here to the state. There’s a reason we need to be paying it,” said Sadie Holtry, another regular Amazon shopper.
Officials say Utah is now one of about 25 states that have Amazon agreements. The way it will work is Amazon will collect the tax and give it directly to the Utah State Tax Commission. The commission will then distribute the money back to individual cities and the state as a whole.