Indiana and Amazon Strike Deal On Sales Tax Collection, Collections To Begin In 2014
A deal has been reached between Amazon.com and the state of Indiana on the issue of sales tax. Beginning in 2014, Amazon.com will voluntarily start collecting sales tax on all sales.
Indiana Gov. Mitch Daniels alongside Amazon executives made the announcement during a recent news conference.
Daniels said the Internet giant agrees with the state that they should collect what is duly owed.
In the last several months, states have been going after Amazon because it’s not required to collect state sales tax and remit the money. Critics argued Indiana is losing out on $300 million in sales tax every year because of Internet purchases. Daniels said the move to collect sales tax is likely to generate at least $25 million annually. A 2014 target will allow the company to work out bugs and logistics.
This timeframe gives federal legislators time to pass a required sales tax to be collected on every single Internet purchase. Should federal legislation be implemented, Amazon will have to start collecting sales tax in 90 days.
Daniels said a federal solution treating all states and retailers the same is the only answer to the problem. However, he said, Amazon has worked with the state to deal with the shortfall. Amazon has been trying to get Congress to pass national legislation on Internet sales tax.
Traditional companies that are yet to adopt online business models have been pushing for the collection of sales tax by Amazon; some arguing that Amazon has an unfair price advantage because it fails to collect tax in most states. Amazon said many folks shop on its site for more reasons than just to avoid sales tax such as availability and wide product selection.
The Indiana Retail Council did question why the state wanted to wait an additional two holiday shopping seasons to impose the sales tax, bringing the level even with brick and mortar stores and Amazon.
Grant Monahan, Indiana Retail Council president, said the deal doesn’t provide relieve to the state’s Main Street retailers right now.
California and Amazon struck a deal to collect sales tax in the state beginning in July.
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