Your Taxes: Amazon – the final tax-free frontier | SummitDaily.com
YOUR AD HERE »

Your Taxes: Amazon – the final tax-free frontier

Michele Knight, CPA

With the elections past us, I am anxiously awaiting news from Washington as to how best to structure your year-end tax planning, but I don’t dare put any predictions in writing as of yet because they’d still just be educated guesses at this point in time! If you have the time now, the best thing you can do is start organizing your records (figuring out which stocks have done well or lost the most, adding up your business expenses, totaling your medical and charitable deductions, etc) so that when laws are passed, you are in a strong position to act on any possible tax savings strategies this late in the game. I promise to update my blog as news becomes available, so please visit http://www.cpamichele.com to enter your e-mail address if you want updates as soon as they become available.With a few weeks to go before we learn about the new tax laws, I wanted to take this opportunity to make everyone aware of a law that passed back in March 2010 that many are unaware of: HB 10-1193, or the “Amazon Tax” law. This law states that Colorado residents must begin paying sales tax on their online purchases. This law is a bit awkward because residents are already required to pay use tax (similar to sales tax, but remitted by the purchaser rather than the merchant) for any purchases made over the Internet, from mail order catalogs or through toll-free numbers where the out-of-state vendor does not collect Colorado tax on your behalf. Didn’t know that? You’re not alone!So, let’s assume that you’re in the 99.9 percent of Colorado taxpayers who do not file an annual use tax return on your out-of-state purchases. This gives websites like Amazon.com a huge advantage over local retailers. Assuming you choose an item with the free super-saver shipping, you can save nearly 8 percent in sales tax by purchasing through them, rather than going to your local store. As a side note, I recently discovered Amazon’s Subscribe & Save program – if you buy diapers, pet supplies or household cleaners, check out my website for more details, the savings is pretty amazing! With the state needing more revenues to balance the budget, last March it was decided that Colorado would join several other states in requiring Amazon.com and other online retailers to send frequent purchasers (defined as spending $500 or more annually) an estimated sales tax form each year. This form would also be made available to the Colorado Department of Revenue so they could track people down and collect sales tax from them.Naturally, this has sparked a battle in the courts (doesn’t everything lately?) and Amazon is arguing it’s against their customer’s First Amendment rights to release their names and purchases. This issue is still playing itself out as we reach year-end, so the only true advice I can give is to shop now if you want to save sales tax on your purchases, and don’t be shocked when you receive a letter at year-end asking you to pay sales tax on an entire year’s worth of purchases! Michele Knight, owner of Knight Accounting & Technology, is a CPA and QuickBooks ProAdvisor based in Dillon. For more info and to contact her, visit http://www.cpamichele.com.


Support Local Journalism

Support Local Journalism

As a Summit Daily News reader, you make our work possible.

Now more than ever, your financial support is critical to help us keep our communities informed. Every contribution, no matter the size, will make a difference.

Your donation will be used exclusively to support quality, local journalism.