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EcommerceBytes-NewsFlash, Number 2715 - January 11, 2012 - ISSN 1539-5065    4 of 5

Amazon Reaches Agreement with Indiana on Sales Taxes

By Kenneth Corbin
January 11, 2012

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Amazon has reached an agreement with the Indiana government to begin collecting sales taxes on purchases shipped to that state, marking the latest twist in the retail giant's often contentious relations with state governments over tax issues.

Under the agreement, Amazon committed to begin collecting Indiana sales taxes in 2014, a move that the state's Department of Revenue estimates would generate $20 million to $25 million in annual revenue that currently goes uncollected.

The deal does not involve any other companies. Indiana estimates the total volume of uncollected revenue from online sales taxes at about $75 million each year.

As with similar deals Amazon has reached with other states, the Indiana sales tax collection requirement would be trumped by action at the federal level to address ecommerce taxation. Amazon recently began championing congressional action to streamline the patchwork of state and local tax codes, a move that would dramatically expand the tax liability for online retailers, who currently are only obligated to collect sales taxes on purchases made in states where they have a physical presence.

Amazon agreed to begin collecting sales taxes in Indiana on Jan. 1 2014, or 90 days from the enactment of a federal law - whichever comes sooner.

"The only complete answer to this problem is a federal solution that treats all retailers and all states the same," Indiana Gov. Mitch Daniels said in a statement. "But for now, Amazon has helped us address the largest single piece of the shortfall, and we appreciate the company working with us to find a solution."

Indiana becomes the fourth state with which Amazon has reached an agreement to collect sales taxes some years in the future, pending a federal law. In June, South Carolina enacted a law that will exempt Amazon from collecting sales taxes until 2016. In California and Tennessee, Amazon has agreed to begin collecting sales taxes in 2014.

Amazon currently operates three warehouses in Indiana, and has announced plans to open a fourth.

Indiana-based real estate giant Simon Property Group hailed the news of the agreement, saying that it would withdraw a lawsuit it had filed against the state in November. The firm reiterated its support for measures pending in the U.S. Senate and House that would simplify the tax code and require retailers to collect sales taxes on out-of-state purchases.

That aligns with the position Amazon has taken, a stance that has put the company in the opposing camp from rival eBay, which has been lobbying against any measure to extend sales tax obligations. Representatives from the two ecommerce giants have squared off in testimony before congressional committees considering the legislation.

Traditional retail advocates and other supporters of a requirement for online sellers to collect sales taxes are quick to point out that such a measure would not create a new tax. Even if the tax is not collected at the time of the sale, consumers are still responsible for remitting the applicable tax on their state returns, but more people either don't know about the requirement or ignore it. As a result, state tax administrators complain about growing amounts of uncollected revenue as consumers do more of their shopping online.

Spokesmen for Amazon did not respond to requests for comment for this article.

About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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