is finally being forced to take a hands-on approach to tax collection. Next year the company will begin collecting sales tax for its third-party merchants in its home state of Washington, according to an announcement made this week through an Amazon sellers forum. Marketplace Tax Collection, the new service, will automatically "calculate, collect, and remit" sales tax for third-party merchants selling products to customers in certain states, Amazon said. Washington will be first because the state passed a law that goes into effect on Jan. 1, requiring all online marketplaces — like Amazon — to collect sales tax on behalf of its third-party sellers. This is new territory for Amazon, which to date has charged sales tax on products it sells directly to consumers while leaving it up to sellers on the platform to handle their own tax collection. Those transactions only require a tax if the merchant has a physical presence in the state of the buyer. Washington is removing that loophole and saying that all internet sales get taxed. Now, if an electronics retailer in Cleveland sells a TV to a customer in Seattle, Amazon will handle the relevant tax collection and payment, regardless of the location of the sender or the fulfillment center.

'Copycat this effort'

Other states are likely to follow, said James Thomson, a partner at BuyBox Experts and former Amazon head of services. "With Amazon now agreeing to collect and remit sales taxes for Washington state, I expect every other state will aim to copycat this effort," Thomson said. It makes "it easier for states to collect sales tax for marketplace sales," he said. States including Minnesota and Rhode Island will likely become eligible for the service once their laws kick into effect in the coming years. As of now, sellers in states other than Washington are still "responsible for their tax obligations," Amazon said. As Amazon's influence grows, there's big money at stake. U.S. e-commerce sales are expected to reach $500 billion by 2018, according to Forrester. The Multistate Tax Commission estimates there's more than $2 billion in annual uncollected taxes on sales just from Amazon sellers that use the company's warehouses. "This concept of a mass mall that exists out there in the cloud — it's taken the states a while to get their heads around it," said Scott Peterson, vice president of U.S. tax policy and government relations for tax software developer Avalara. "Momentum is building towards a lot of people collecting in the future that never collected before."