Following the announcement of Signet’s purchase of James Allen, I wrote that James Allen’s sales tax advantage may soon disappear. After all, a company that has a physical presence in a state is required to collect sales tax. And James Allen is now part of Signet.
However, a recent check of James Allen shows the e-tailer still only collect sales tax in New York and Maryland, where it’s based.
Signet spokesperson David Bouffard tells JCK:
JamesAllen.com continues to operate as an independent division of Signet at the direction of R2Net’s leadership team, which remains intact. As such, JamesAllen.com’s policy regarding sales tax collection remains the same as it was pre-acquisition.
From Signet’s standpoint—and it likely has wonderfully well-compensated lawyers to figure this out—none of its brick-and-mortar operations promote, or play any role in, James Allen’s operations, so that is considered a separate business and not governed by nexus. Of course, this is an evolving area of law, and not everything is clear.
Let’s look at Walmart’s acquisition of Jet.com as a comparable case. Following that acquisition, there was much debate over whether Jet.com would have to collect sales tax. Today, Jet.com collects sales tax in 29 states, which is more than before but less than the 50 states Walmart currently has a presence in.
In any case, the James Allen sales tax situation could change if, as Signet’s CEO has suggested, the e-tailer looks into opening up its own showrooms. That is one of the issues with truly going omnichannel.
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