At the end of 2011, Amazon made a hard push to ensure all of their third-party merchants had provided IRS Form 1099 information. The push was hard enough that Amazon would be deprecate anyone who didn’t complete this (no word if that actually happened). Why now, and what makes it so essential to have this information provided by the end of 2011, or at least before 2012 rolled around?

All of Amazon’s work with individual states suggest that by 2014, Amazon expects to have the internet sales tax issue worked out. As Internet Retailer reported, Amazon has cut a deal with another state, this time being Indiana to solve the tax issue. Their provision pledges that Amazon will voluntarily collect sales by January 1, 2014 for all Indiana consumers on Amazon. Some people believe Amazon is anti-tax, but that’s not the case. As Jeff Bezos has stated, Amazon is just pressing for a sensible tax system, and it’s looking more and more likely a system will be in place within 1-2 years, with a bill being passed either this year or next.

What makes the 2012 push for 1099 forms interesting is a rumor written about by Jason Calacanis that Amazon may open retail stores. That would be a huge change, and if it were to happen, it would make Amazon instantly tax liable in any state which a store is opened in. Adding more credibility to the rumor, the physical store roll out would also make sense because it’s inline with Amazon’s always aggressive strategy, fits with their push to grab offline sales such as Amazon’s Q4 offer to credit consumers to buy on Amazon, would stick it to Walmart (I wouldn’t underestimate this one), and fits with their same day delivery experiments where a consumer could have an item delivered to them same day and thus create a store with very little overhead expenses due to the light inventory.

I don’t usually devote space to speculation, but this rumor has a certain ring to it which may be worth listening to.

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