Arizona eyes online retailers, like Amazon, to collect taxes - East Valley Tribune: Business

Arizona eyes online retailers, like Amazon, to collect taxes

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Posted: Friday, February 3, 2012 1:03 pm | Updated: 1:33 pm, Sun Feb 5, 2012.

PHOENIX -- Arizona is moving toward making online merchants collect sales tax on residents' purchases, a departure from the state's previous hands-off stance.

The state Revenue Department has billed Amazon.com for $53 million in uncollected sales taxes for nearly five years. Amazon says it's contesting the state's move, which the company disclosed in its latest annual report.

At the Legislature, Arizona lawmakers have introduced a bill to require Amazon.com and other retailers with distribution centers in the state to collect sales taxes. The bill, which is supported by brick-and-mortar retailers, is scheduled for a hearing in one Senate committee but so far not in a second.

Arizonans are obligated under law to pay use tax - a version of the sales tax - on items they purchase for nonbusiness use, and they are supposed to report and pay that amount to the state if the seller doesn't.

State officials say individuals typically don't do that, but a new state law approved last year now requires taxpayers to report unpaid sales-tax obligations as part of their state income tax.

Under a U.S. Supreme Court ruling, companies generally don't have to collect tax on sales that go to states where the companies don't have a physical presence, such as an office or a factory.

Amazon contends it doesn't have to collect sales tax on Arizona sales because a subsidiary operates its facilities in the state.

The Department of Revenue issued its $53 million assessment to Amazon in November on behalf of the state and certain cities between early 2006 and the end of 2010, including tax and interest, Amazon's report said.

"We believe that the assessment is without merit and intend to vigorously defend ourselves in this matter," the Seattle-based company said.

The assessment was reported Thursday by the Seattle Times.

Revenue Department spokesman Anthony Forschino declined comment, citing requirements for confidentiality for individual taxpayers.

Arizona issues its assessment 14 months after Texas issued a similar one for $269 million.

Amazon last July announced it plans to open a fourth Arizona distribution center, all in the Phoenix area. The company said the expansion would give the company an Arizona workforce of more than 3,000.

A company executive at the time said Arizona's stance on the tax issue was a major factor in the company's decision to keep expanding in the state.

Republican Gov. Jan Brewer at the time hailed the company's decision to locate the new facility in Arizona, saying it reflects the state's push to establish itself "as one of the most desirable places ... to do business."

Brewer spokesman Matthew Benson said Friday that the tax agency's assessment doesn't undercut Brewer's push to add jobs in the state.

"The state has a good relationship with Amazon," he said. "It's been a mutually beneficial relationship."

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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