Indiana, Amazon.com reach online sales tax deal

January 9, 2012 - 8:30 PM

INDIANAPOLIS (AP) — 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. It follows a lawsuit by Indianapolis-based shopping mall owner Simon Property Group against the state over the issue and a lobbying push on state legislators by traditional retailers to end what they call an unfair price advantage for 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.

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."