Leaders with Amazon have started to notify area residents that they are required to pay tax to the state Department of Revenue on items purchased from the online retailer.
Those who don’t may face financial penalty, spokesman for the Tennessee Department of Revenue Billy Trout said.
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 2012 was [X amount].
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.
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: https://apps.tn.gov/usetax
This is the second year Amazon has notified consumers via email.
The legislation that will require online retailer Amazon to begin collecting sales tax in 2014 also required Amazon to send notices to consumers, Trout said.
Before lawmakers agreed on legislation about Amazon, state residents were technically required to pay a use tax to the Tennessee Department of Revenue when making an online purchase from any retailer that does not collect tax.
And although Trout said that Tennessee has a high voluntary compliance rate with all taxes, it is difficult to enforce the tax for items purchased via Amazon, which is currently the only retailer that this legislation applies to, Trout said.
“We do have audit and tax enforcement, [but] it’s not extremely easy to do because we are working with a large number of online retailers and other sources that make it somewhat difficult to track," he said.
Those who don’t pay could face a penalty, which is computed at a rate of 5 percent per month—or any portion of a month—from the due date until the taxes are paid.
The maximum penalty is 25 percent of the tax amount due, and the minimum penalty is $15.
There is also a 7.5 percent interest rate added into that, Trout said.
But there is flexibility in the due dates, he also said.
The use tax can be paid monthly, quarterly, semi-annually or annually. And Trout said annually is the preferred way.
The due date is the 20th of each month.
But people who haven’t paid already won’t necessarily face fines, Trout said.
“They should do it as soon as possible, so we can avoid any future interest or penalty,” he said.
Local residents had varying reactions to getting the message from Amazon about the use tax.
Chattanooga resident Nathan Frazier said via email that he seems to owe about $25 for a $69-dollar purchase, which he said was a little extreme.
But his main concern is that he wanted to know about the taxes when he checked out for the purchase.
“I had no clue about them until I received the email,” he said.
Another local resident, Natalie Green, said via email that she was “a little annoyed” when she got Amazon’s notification.
Her "pesky conscience" will lead her to pay what she owes, but she said she would prefer to pay small lump sums of use tax instead of a bigger lump sum.
Area resident Zach Monroe said he looked closely to make sure the Amazon email wasn’t spam, and he thinks consumers are taxed enough already. But he understands that local and state economies lose if online retailers don’t collect tax.
East Ridge resident Stephen Pollard said he isn’t happy about the tax.
“I am pretty government-averse, so I hate the idea of taxation and regulation,” he said via email. “It may be needed sometimes, but I've used Amazon for almost 10 years because they aren't taxed, so you can imagine my vexation.”
Click here to read more about the tax guidelines.
Updated @ 8:30 a.m. on 1/30/13 for clarity.