Today I discovered that in addition to largely eliminating the $9.99 major-publisher best-seller, it appears that the “agency model” of selling e-books means you may be paying sales tax now on many books that before were untaxed. (OK, technically, you may still have been theoretically on the hook to pay your state’s “use tax” on your own — but I’ll bet 99.99% of you don’t.)
For any who are not aware, this so-called agency model has the publishers who chose to use it effectively selling directly to the consumer, using Amazon as its agent to perform the transaction. This was brought about by the publishers due to various pressures — including from Apple — allowing them to effectively dictate the price their e-books sell for at retail, instead of the standard retail practice of selling at wholesale price to the retailer (e.g. Amazon) and then the retailer is free to sell at whatever profit margin (or even loss) which they choose.
Anyway, this apparently means that now instead of Amazon’s sales tax policies being in effect when you purchase an e-book from one of these publishers, it is instead the publisher’s policies/obligations which determine whether Amazon will add a sales tax to those purchases. To quote from Amazon’s help pages (my highlighting):
The following is a partial list of merchants selling items at Amazon.com which may be included in your order, and the states in which they charge sales tax.
- Amazon.com LLC: KS, KY, ND, NY and WA
- Amazon Digital Services, Inc.: KY, ND, NY and WA (Kindle content, MP3s, and digital videos are only taxable in KY and WA)
- Magazine Express, Inc.: AL and WA
- Synapse Services, Inc.: WA only
- Target.com/ITC: All states other than AK and VT
- Hachette Digital, Inc.: AL, AZ, CO, CT, DC, HI, ID, IN, KY, LA, ME, MS, NC, NE, NJ, NM, SD, TN, TX, UT, VT, WA, WI and WY*
- Harper Collins Publishers, LLC: All states other than AK, AL, AZ, DE, HI, MT, NH, NV, OK, OR, SD, VT and WY*
- Penguin Group (USA) Inc: All States*
- Simon & Schuster Digital Sales, Inc.: All states other than AK, DE, MT, NH, and OR*
- Macmillan: AZ, CO, CT, DC, HI, IN, KY, ME, MS, NC, NE, NJ, NM, SD, TN, TX, UT, VT, WA, WI and WY*
- Zondervan Corporation LLC: CA, CO, FL, GA, IA, IL, IN, LA, MA, MD, MI, MO, NC, NV, OH, PA, SC, TX and WA*
* Kindle books sold by various publishers are subject to sales tax based on the publisher’s state tax reporting obligations and the taxability of digital books in those states. As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you’ve been accustomed for Kindle books.
So now when you buy a NYT best-seller for you Kindle, don’t be surprised if not only does it cost $14.99, but you’ll like end up paying even more to your state for the opportunity to read it.