Arizona retailers urge governor to negotiate with Amazon over tax issue - East Valley Tribune: Business

Arizona retailers urge governor to negotiate with Amazon over tax issue

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Posted: Wednesday, April 4, 2012 1:27 pm | Updated: 8:03 am, Mon Apr 9, 2012.

Arizona retailers are asking Gov. Jan Brewer to start negotiations with the nation’s largest online retailer to get them to start collecting state and local sales taxes.

Michelle Ahlmer, executive director of the Arizona Retailers Association, said Wednesday there is no reason that Amazon, which has warehouses in Arizona to ship products to Arizona customers, should be excused from having to collect the same taxes as local merchants.

Ahlmer acknowledged that the state law governing who is subject to the levy may need to be clarified. And she noted such a measure awaits action by the House Appropriations Committee.

But Ahlmer said all that could be helped along if Brewer were to do what her Virginia counterpart did: Negotiate a deal with Amazon to agree to support a change in law — and, more to the point, start collecting the taxes.

Brewer, however, said she’s not interested in such talks, at least not now. Anyway, she said, the state Department of Revenue already is trying to collect some money from Amazon, under existing laws.

“I don’t think at this particular time that it’s important that I’m involved,” she said. “I think that they need to sit down at the table. They need to work with the Department of Revenue.”

That refers to Amazon’s admission, in statements filed with the Securities and Exchange Commission, that Arizona tax officials have issued a $53 million assessment for unpaid taxes from March 1, 2006, through the end of 2010.

But Ahlmer said that is no guarantee the state will ever collect the levy absent an agreement. And the company, in that SEC filing, called the assessment “without merit,” saying it intends to defend itself vigorously.

Ahlmer said the whole problem could be resolved quite simply if Brewer follows the lead in Virginia and elsewhere and gets Amazon to cooperate rather than contest the law.

“In Virginia and in these other states, the key component has been the governor,” said Ahlmer, who initiated the meetings with Amazon.

“It is essential in Arizona that we have that same kind of leadership that should bring us all in a room,” Ahlmer continued. “We can hammer out an agreement like’s been done in other states that would give certainty to the retail community, the online retail community and the state of Arizona moving forward.”

One key has been that effort to alter the law.

Federal courts bar states from requiring retailers with no legal “nexus” to that state from having to collect sales taxes.

What that has been interpreted to mean are companies with a retail outlet in the state. That also includes the online affiliates of these firms, like Bestbuy.com, because of their retail stores.

Amazon has argued that its warehouses — what it calls “fulfillment centers” — do not meet that definition because people cannot walk in to buy something off the shelf.

A change being pushed by Sen. Al Melvin, R-Tucson, and others would expand the legal definition of that legal nexus to specifically include warehouses. So far, though, the company’s lobbyists have kept that proposal and watered-down version by Rep. J.D. Mesnard, R-Mesa, from being approved.

Ahlmer said Brewer’s involvement could blunt that opposition.

The governor, however, was in no rush to step in.

“We have time,” she said. “It’s not urgent, it’s not something that needs to be addressed right now.”

But Gayle Shanks, one of the owners of Changing Hands Bookstore in Tempe, does not share that lack of urgency.

She said the current arrangement means an ongoing loss of dollars for her store, which pays taxes. And Shanks said it’s also not fair.

“So people should be allowed to come into my bookstore, look at all the books, look at my staff’s recommendations, write it all down, these are the ones I want, and the state of Arizona says, ‘OK, we’re not going to make you pay sales tax on Amazon but we are at Changing Hands,’” Shanks said.

“So you go up to that counter with that $10 book and you pay $10.93,” she continued. “Or you write down the name of that book that I recommended and you go on Amazon, and it’s the same $10 but you don’t have to pay 93 cents.”

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