
Jet.com pitches itself as a lower-priced alternative to Amazon.com, partly by not tacking on sales taxes in most states. But tax experts say Jet’s sale to retail giant Wal-Mart Stores Inc. could jeopardize that price advantage by forcing it to collect taxes nationwide. A 1992 Supreme Court ruling allows retailers to avoid collecting sales taxes in states where they don’t have a physical presence like a warehouse, a local store or office. With far more distribution centers nationwide, Seattle-based Amazon collects sales taxes in 28 states covering most of the U.S. population. New York-based Jet collects taxes in just seven states, avoiding big ones like California and Texas. It isn’t clear how Wal-Mart will handle tax collections on Jet.com. Tax experts say it will depend on how ownership and operational integrations are structured.
Total Retail's Take: This is just one of the many details that will have to be worked out as Wal-Mart works to finalize its acquisition of Jet.com. This one may have a bigger impact on consumers than most, however. With Wal-Mart having a physical presence in every state, and thus required to collect sales tax in those states, how will that impact Jet, which has always promoted itself as a cheaper alternative to other online retailers, notably Amazon.com? Consider this example: On Wednesday, both Amazon and Jet each listed a Le Creuset French oven for $319.95. But an Amazon shopper in Illinois, where the retailer has a physical presence, would have to pay sales taxes of $32.79, unlike the Jet shopper. As you can see, adding sales tax can be the difference between winning or losing a purchase.
- Companies:
- Amazon.com
- Wal-Mart

Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.