Amazon To Begin Collecting Mass. Sales Tax In '13
Amazon, the world's largest online retailer, will begin collecting Massachusetts sales taxes starting next fall under a new agreement with the state that could net the state tens of millions of dollars next year, according to the Patrick administration.
Small businesses have been pressuring Gov. Deval Patrick to reach a deal with Amazon over sales tax collections in time for this holiday shopping season, but the agreement will not take effect until Nov. 1, 2013.
"I value the contributions large and small employers alike make to Massachusetts' economic vitality, and this agreement captures that," Patrick said. "We are thankful Amazon was willing to come to the table and we will continue our conversations with them about creating jobs here. This agreement is a win for all sides, and I am pleased it promises to generate millions in long-term revenue for the commonwealth," the governor said in a statement.
Amazon will also support Massachusetts in its effort to promote a federal solution to the issue of online retailers collecting sales tax on purchases from individual states. A number of states, including New Jersey, have reached similar agreements with Amazon.
Administration and Finance Secretary Jay Gonzalez told the News Service that the Department of Revenue's best estimate for sales tax collections in fiscal 2014 are in the low tens of millions, which will be factored into the state's revenue estimates that economists and lawmakers are meeting Wednesday to discuss.
"It's not going to solve all of our revenue problems, but it's going to help mitigate the erosion of sales tax revenues. That is a function of the fact that more and more people are buying stuff from remote Internet retailers and less from traditional brick-and-mortar retailers who are physically here in Massachusetts so it's very good news," Gonzalez said.
Under federal law, online retailers do not have to collect and remit sales taxes from customers to states where the company does not have a physical presence.
Amazon purchased a robotics company in North Reading earlier this year, and opened a research office in Kendall Square in Cambridge, establishing what some officials suggested was the "brick and mortar" nexus necessary for state to force the company to collect the taxes from online shoppers.
The related business interests, however, are unlike the distribution facilities directly related to its online retail operations that other states have used to force agreements, Gonzalez said. More than a dozen states have reached deals with Amazon over tax collections, including Nevada, New Jersey, Texas, California and Pennsylvania.
Agreement Applauded
The commonwealth's announcement was immediately applauded by an organization made up of retailers, local elected officials, labor unions, trade and business associations, and others, called The Massachusetts Main Street Fairness Coalition.
"Once again, Massachusetts is taking action on an important issue ahead of our leaders in Washington," said Salem Mayor Kimberley Driscoll, the coalition's co-chair. "In the age of the smart phone, sales taxes should be applied the same for purchases whether made on Main Street or online. We are grateful to Governor Patrick for his leadership in leveling the playing field between our Main Street businesses and Amazon."
Jon B. Hurst, president of the Retailers Association of Massachusetts, added: "Our members are grateful and relieved to know that they will not have to face another holiday sales season with a 6.25-percent tax disparity with the world's largest online seller. Although we would have preferred a level playing field this holiday season, we are grateful to Governor Patrick for his tireless work on this issue. Unfair sales tax application is an antiquated policy that favors out-of-state businesses over local employers and it has to end. The announcement today is an important and significant step toward realizing that ultimate goal."
One member of the retailers' group, Alan Levine of Percy's TV and Appliance in Worcester, was "very happy" with the Patrick administration's announcement. "It's been a long time coming. It evens the playing field for a lot of mom-and-pop (retailers) like ourselves. It makes (for) a more level playing field."
(Rick Saia of the WBJ staff contributed to this report.)
Image credit: freedigitalphotos.net
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