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Indiana reaches online sales tax deal with Amazon.com

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Amazon.com will begin collecting Indiana's 7 percent sales tax from customers in the state in 2014, under an agreement announced Monday.

The deal with the online sales company could lead to Indiana bringing in at least $20 million more in annual sales tax revenue.

Gov. Mitch Daniels' office said Indiana will become the fourth state with such a tax collection agreement with Seattle-based Amazon. The agreement follows a lawsuit by Indianapolis-based shopping mall owner Simon Property Group against the online retail giant and a lobbying push by traditional retailers to end what they call an unfair price advantage for all online retailers.

The deal doesn't include any other companies, but Daniels said the state is asking Congress to require all online businesses to collect state sales taxes. Daniels said the status quo of traditional businesses charging sales taxes while few online retailers do so is not fair.

Paul Misener, Amazon's vice president for global public policy, said at a news conference in the governor's office that the company supported federal legislation requiring all sales tax collections by all online companies.

"It's the only way to level the playing field for all sellers," Misener said. "It's the only way for Indiana to obtain all the sales tax revenue that is already owed."

State officials agree that the Amazon agreement will mean the collection only of a portion of the sales tax revenue that Indiana should receive. The State Budget Agency estimates uncollected online sales taxes at $75 million a year, while Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, said it could be as much as $250 million.

A report from the Indiana Fiscal Policy Institute released in November estimated a range of $40 million to $114 million.

The state's current policy dates to a 2007 deal with Amazon for it to open its first warehouse in Indiana with the promise that state lawmakers wouldn't push for online sales tax collection. Amazon now has three distribution centers open in central Indiana and announced plans last summer for a fourth, but hasn't given details on how many workers it has.

Kenley has testified before a congressional committee in support of a federal law covering online sales tax collections. He said many companies other than Amazon don't want to give up the competitive advantage in pricing from not collecting the taxes.

"This step forward continues to put more pressure on them," Kenley said.

Simon Property Group said it was dropping its lawsuit against the state and that Indiana's deal with Amazon will improve the competitive fairness between traditional and online retailers.

The Indiana Retail Council, which last month launched a legislative lobbying effort on the issue, didn't immediately respond to a request for comment.

Indiana and Amazon officials said the 2014 start of online sales tax collections was meant to give time for Congress to act on the federal proposal.

"We want to get it done this year, we're hopeful," Misener said. "But we may need 2013 to accomplish it."

Amazon.com will begin collecting Indiana's 7-percent sales tax from customers in 2014 under an agreement with the state announced Monday.

Gov. Mitch Daniels and an Amazon executive said the agreement could lead to Indiana collecting at least $20 million more in annual sales-tax revenues.

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  • ?
    You work for Simon or the gov? Why the rooting interest... Either way; good luck!
  • Amazon will make money off this
    How? By offering a service to smaller online retailers to collect the tax for them for a fee (2.9%) which will amount to about 100 million extra dollars in revenue for Amazon
    http://articles.latimes.com/2011/nov/03/business/la-fi-amazon-tax-collect-20111103
  • Does not help Simon
    We will now take our business to buy.com, ebay, overstock, et al. I refuse to pay higher prices + sales tax at the overpriced and generally unpleasant malls.
  • IT'S ABOUT TIME!
    That's all I have to say about that.
  • Indiana # 2 State Taxes
    California, despite a recent 1 percent reduction in its sales tax rate, still has the highest state-level rate at 7.25 percent.[2] Five states tie for the second-highest rate of 7 percent: Indiana, Mississippi, New Jersey, Rhode Island and Tennessee.
    Source: The Tax Foundation
  • Finally!
    It was definitely unfair to require local retailers to collect sales tax and not require Amazon to do the same. After all, Amazon rings up more sales in day in Indiana than most local retailers do in a year. Instead, we customers have been required to track our purchases, calculate these taxes, and remit them annually to the state. I'm glad that burden finally has been shifted to Amazon...hopefully, it will be soon for other online retailers, too.
  • So Right
    T0:Goodby Amazon - you are absolutely right, that will give them plenty of time to scope out new digs, and dump IN like the other states theyve left -thanks Mitch, for that parting gift!!
  • Amazon retail?
    I think that in states where Amazon collecvts sales tax, they should open brick and mortar "pick up stores," similar to JC Penney Catalog stores and Walmart "site to store" counters.
  • Online sales tax
    You do all realize that when you make an online purchase and are not charged state sales tax, you are still obligated to pay that tax when you file your state tax return. (True, most people ignore this and there is seldom a penalty, but it's still breaking the law.) Amazon has collected sales tax in Kentucky for several years with, I'm sure, little detriment to their business.
  • State Sales Taxes
    Only six states have higher sales taxes than Indiana when you include the maximum local surcharge, source Modern Survival Blob;
    Missouri (9.2%)
    Washington (9.5%)
    Tennessee (9.8%)
    Alabama (10%)
    Arizona (10.6%)
    California (10.8%)
    Illinois (11.5%)

  • I will still buy on line before going to the stores
    It is so much easier and I can stay home and do all my shopping while everything is sent to my front door.
  • Sorry JM You are Wrong
    There are fifteen (15) states with a higher sales tax than Indiana.
  • Yea Simons!!!!!
    Yea Simons!!!! Keep that tax money flowing in so we can continue to subsidize the Pacers and Colts and other projects that will help Indiana's rich get richer on the backs of the poor and middle class.
  • ByeBye
    Indiana has the second highest sales tax in the country, only California is higher, but sales tax isn't why I buy online it is for the selection and convenience. Simon malls may have won the battle but they won't win the war.
    • NOOOOOO
      NOOO NOO NOOOO NOOOO. I moved to Indiana from Illinois to escape brutal taxation -- this place is not the economic sandbox it's cracked up to be.
    • Time to move
      I like how the time line is 2 years out. This gives Amazon plenty of time to work out there relocation of the Indiana facility. Indiana will be able to collect a year to a year and a half worth of sales tax before Amazon closes up shop in Indiana causing the loss of thousands of jobs(5,000 employeed as of May 2011). Glad to see Mitch is working hard to make a dollar while driving up unemployement... Guess thats one way to pay all that unemployment. Thanks Mitch, most days I like what you've done, today, NOT one of them!
      • Bandaid
        Retailers are going to continue to lose business to online competition. Times are changing and putting this bandaid on the problem for retailers isn't going to change things in the long term. Drive-in movies were replaced by online rentals too. It's just evolution.
      • It's Fair
        As much as I hate to pay more, this is only fair to Indiana and retailers alike. This really needs to be addressed at the Federal level.
      • Close B&M
        I still won't shop at a Brick and Mortar big box stores. They are overpriced items to pay Simon Properties high retail rates. I hope Amazon doesn't leave Indiana now.

        What happens when tax is 8% in 2014?
      • Yippee
        I am so glad I get to pay more taxes. Thank you sir may I have another!
      • Huh....
        Well that blows!
      • Why so long to enact?
        Why does it take so long to enact this change? Two years seems an excessively long time...why not 2013? Does it really take 2 years to program that change???? This agreement takes the pressure off the Republicans without any real benefit to Indiana in the meantime--that's 2 more holiday seasons without online sales tax collections.
      • Much easier and better for all
        I'm glad they are doing this. It keeps things more competitive and ensures the state will generate needed revenue. Not only is it a pain to track online sales to pay "use tax" at year end, most people don't do it. Good for Amazon and IN!!
        • Good to see
          Good to see compromise and execution on something that makes sense. Amazon is where retail has been heading and will continue to go.

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