Amazon.com, the huge online retailer, will begin collecting Massachusetts sales tax on purchases made by Bay State customers, starting next fall, Governor Deval Patrick’s office said Tuesday.
“I value the contributions large and small employers alike make to Massachusetts’ economic vitality, and this agreement captures that,” Patrick said in a statement. “We are thankful Amazon was willing to come to the table and we will continue our conversations with them about creating jobs here. This agreement is a win for all sides, and I am pleased it promises to generate millions in long-term revenue for the Commonwealth.”
Patrick’s press release included a statement from Paul Misener, Amazon vice president of global public policy.
“We appreciate Governor Patrick’s commitment to Massachusetts jobs and investment and his support for legislation now before Congress that would provide a final resolution to the sales tax issue,” Misener said. “We look forward to creating hundreds of high tech jobs in Massachusetts and continuing to work with Governor Patrick, state leaders, retailers, and Congress to pass federal legislation permitting interstate sales tax collection. Federal legislation is the only way to level the playing field for all sellers, the only way for states to obtain more than a fraction of the sales tax revenue that is already owed, and the only way to fully protect states’ rights.”
The Patrick administration had been pressing Amazon.com to begin collecting sales taxes from Massachusetts customers, arguing it is no longer exempt under federal law from charging the tax.
Under federal law, online retailers do not have to collect sales taxes from Massachusetts buyers unless the company has a physical presence, such as an office or store, in the state. But officials in the administration of Governor Deval Patrick contend that Amazon’s purchase of a North Reading technology firm, Kiva Systems, earlier this year, as well as its ongoing efforts to recruit engineers for a new office in Cambridge, establish the kind of physical presence necessary to collect the 6.25 percent sales tax.
The state government lost out on an estimated $387 million in 2011 from Massachusetts residents buying products tax-free from online retailers, according to the Massachusetts Main Street Fairness Coalition, an association of retailers, unions and local officials.
The group has been pressuring the Patrick administration to compel Amazon to collect and remit state taxes.
Amazon now collects taxes in several states.
Earlier this year, Massachusetts Treasurer Steven Grossman wrote in a letter to US Senator Max Baucus, head of the Senate’s Finance Committee, pushing for online tax legislation.
“This is not simply a revenue issue . . . it is a matter of fairness and equity to Main Street businesses,” Grossman wrote.
Interviews with about a dozen people at Faneuil Hall Marketplace mid-day Tuesday turned up two opinions on the Amazon agreement. Some people said the agreement seemed fair, others expressed a distaste for taxes.
“I think it evens the playing field for people in Massachusetts,” said Candy Zito-Wolf, 52, an information-technology manager from Watertown. “I think it’s fair --- not to say I don’t love saving on Amazon.”
David Connery, a Clinton retiree, said that Amazon’s decision to start collecting sales tax was probably necessary for the state.
“But I think they tax too much,” he said. “I think one of the advantages of going on the Internet and shopping is not having to pay the sales tax.”