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Amazon tax deal in limbo

A group of Arizona retailers called on Gov. Jan Brewer this week to support legislation that would tax their online competitors, but the lawmaker trying to help broker the deal says the future of the “Amazon bill” is still unclear.

The so-called brick-and-mortar retailers want online companies that have a physical presence in the state to be taxed at the same level they are.

And while the bill applies to any online retailer that fits a particular description – such as those that have distribution centers or warehouses operating in the state – the legislation clearly targets online Goliath Amazon.com.

Two times already this session, a bill addressing the issue has come up for a floor vote in the Senate, but was voted down. The third attempt comes in the form of a strike everything amendment to SB1170, sponsored by Rep. J.D. Mesnard, R-Chandler.

The local retailers who are pushing for the striker say their perspective is simple: equal sales tax rules should be applied to retailers whether they have physical retail locations or online stores.

“All we want is an even playing field,” said Michelle Ahlmer, executive director of the Arizona Retailers Association.

Kate Tanner, who owns a baby-oriented store in Scottsdale, said she has repeatedly seen shoppers come into her store, test baby strollers for hours, then leave to order the products on Amazon, since there’s no sales tax on purchases made there.

“They want this beautiful UPPAbaby stroller that’s $699, but if they buy it on Amazon, they save $64.50 in tax,” Tanner said.

Tanner said she believes that sort of behavior is having a real impact on her store’s financial stability, and that the problem will go on as long as there’s no deal struck between the state and online retailers.

Tanner said that while she understands the calculation those parents make, the inequality in the current system begs for a solution.

The bill would require Amazon, starting in 2013, to charge sales tax to its customers.

But the deal being pushed would also forgive a $53 million bill the Department of Revenue assessed on Amazon in February for taxes dating to 2006.

While that hefty forgiveness has been the key bargaining chip to get Amazon to remove its opposition to the deal, Mesnard said it also appears to be the sticking point for the Governor’s Office.

Representatives from the Arizona Retailers Association and Local First Arizona said they and some of their members have asked for meetings with Brewer, but that they haven’t heard back.

Brewer spokesman Matthew Benson said members of the governor’s staff have met with the retailers’ associations, but that a personal meeting with Brewer herself would be a tall order.

“It’s a busy time of year, what with budget negotiations and bill review, not to mention the business of running the state,” Benson said. “The governor’s staff is always open to receiving information. She has heard from individuals on both sides of this debate in recent months, and she’s well apprised of the situation.”

Benson said that he’s aware of ongoing discussions taking place between Amazon and the Arizona Department of Revenue.

Amazon lobbyist Don Isaacson said he could not discuss the issue, and company representatives have in the past refused to comment.

Brewer believes that resolving the sales tax-exempt status of large online retailers is something that will have to be changed, Benson said, but that simply shredding a $53 million bill from the state has a serious impact.

Although some states have struck similar sales tax deals with online retailers, only Arizona is contemplating the forgiveness of a back tax assessment.

And Brewer would prefer not to contribute to the expansion of a “patchwork” of disparate state and local tax laws for online retailers, Benson said.

“Ultimately you’re going to have some kind of resolution here,” Benson said. “The governor would prefer to have that resolution come at a national level.”

Mesnard on April 5 said he had a meeting scheduled with Brewer’s office, but that he has a handful of topics that he expects to discuss and he’s not sure if SB1170 will be addressed.

Mesnard said he also doesn’t have any clear indication from the Ninth Floor about its disposition on the deal, but he said he thinks it’s only fair to have a discussion that includes the Governor’s Office.

“It is the Department of Revenue and she is the chief executive, and so I think to a certain extent, they’re already engaged,” Mesnard said. “I think it would make sense to have a more complete conversation.”

One comment

  1. The ‘lawbreakers’ here are the online buyers who fail to pay Sales (Use) tax. You buy online, you owe Use Tax. It’s not my problem that AZ DOR has laws on the books that they fail to enforce. Only Congress can address the issue, and States have done nothing to satisfy the requirements of Quill v ND

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