Governor: Amazon Should Start Collecting State Sales Tax
The Internet giant has been exempt from collecting sales taxes in Massachusetts, but some say that changed when it bought a North Reading company this year.
The Patrick Administration is arguing that after Amazon, the huge online retailer, bought a Massachusetts company this year it is no longer exempt from collecting the state's 6.25 percent sales tax as soon as the 2013 holiday season.
Under federal law, online retailers are not required to collect state sales taxes if they do not have a physical presence in the state, such as an office building or a store, the Boston Globe reported.
But Amazon bought North Reading company Kiva Systems this year, and is recruiting engineers for a Cambridge office, according to the Globe report. This, Patrick says, means it needs to start collecting the state sales tax in Massachusetts.
Amazon has faced similar pressure from other states and collects sales taxes in eight of them, according to the report. States and local retailers have also pressed the federal government to compel Amazon to pay state sales taxes.
“This is not simply a revenue issue ... it is a matter of fairness and equity to Main Street businesses,” state Treasurer Steve Grossman wrote in a letter to the chairman of the federal Senate Committee on Finance, urging him to change online taxation laws.
Indeed, Massachusetts retailers have been fighting this battle for years, arguing that Amazon has an unfair advantage since it doesn't have to collect the tax. The Massachusetts Main Street Fairness Coalition says the state ultimately ends up losing out, too. According to its numbers, the state government lost $387 million in 2011 from residents buying sales-tax-free items online, the Globe reported.