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Amazon to begin collecting Arizona sales taxes

Amazon to begin collecting Arizona sales taxes

October 28th, 2012 in News

PHOENIX (AP) - Online retailer Amazon has agreed to settle a sales tax dispute with the state of Arizona and will begin collecting the state's 6.6 percent tax on product sales in the state on Feb. 1 and on digital sales beginning in July.

Amazon disclosed the settlement in a note contained in its quarterly earnings report filed with securities regulators on Friday.

Arizona sent the Seattle-based company a $53 million bill in November 2011 for taxes and interest on sales that it did not collect between March 2006 and Jan. 1, 2011. The company disputed that it was required to collect the tax on behalf of the state and cities.

Its filing said it will pay an undisclosed but "immaterial" amount to settle that claim as part of a settlement it says it signed with the state last month.

Arizona officials told the Arizona Republic on Friday that they were not able to release details of the settlement until Amazon made it known because of confidentiality rules involving taxpayers.

A spokesman for Gov. Jan Brewer, Matthew Benson, said Saturday that she was pleased with the settlement.

"This agreement allows the State of Arizona to settle its dispute with Amazon without resorting to litigation, while securing partial payment and establishing that Amazon will collect and remit this tax going forward," Benson said in an email to The Associated Press. "Amazon is a quality employer that has invested more than $150 million in Arizona and created thousands of good jobs, and Governor Brewer is proud to have them here."

Amazon has long resisted collecting sales taxes on behalf of states, citing a 1992 U.S. Supreme Court ruling that prohibits states from forcing businesses without a physical presence in the area to collect sales tax, even in states like Arizona where it has warehouses.

But the company has been settling some of those disputes and now collects sales taxes on orders shipped to seven states, including New York and Texas, and has agreed to start imposing levies in six more.

Traditional retailers that operate stores have complained that Amazon is unfairly undercutting their prices because it wasn't collecting sales taxes. Arizona buyers are supposed to report their purchases on their tax returns and pay the tax, but few do.

"We are thrilled that Amazon will be collecting the tax on sales to Arizona customers and will become a business that is investing in Arizona alongside the brick-and-mortar retailers," Michelle Ahlmer, Arizona Retailers Association executive director, said in a statement issued to the Republic on Friday. She said that retailers thrive on competition and will now have a chance at "a fair fight."