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Virginia Governor and Amazon Strike Deal

  • Feb 23, 2012 | Susan McLain

UPDATE: 4/6/2012 - Virginia Governor Bob McDonnell signed Senate Bill 597 into law on 4/4/2012.

3/6/2012 - The Virginia General Assembly "...gave final approval to Senate Bill 597, which expands on an existing state law requiring online businesses with facilities in Virginia to pay the state's 5 percent sales tax."

2/28/2012 - The Virginia House passed a revised version of SB 597 (95 - 2). The amended legislation will require the Senate to reconfirm their approval before heading to the Governor's house for signing.

Virginia Senate Bill 597 (SB 597) passed the Virginia Senate vote earlier this month. The bill “Creates a legal presumption to require registration by a dealer for collection of retail sales and use taxes if any commonly controlled person maintains a distribution center, warehouse, fulfillment center, office, or similar location within the Commonwealth that facilitates the delivery of property sold by the dealer to its customers.”

Passage of this bill means that Amazon and other Internet retailers with affiliates or warehouses in the state of Virginia will be required to collect and remit sales tax on purchases delivered within the state. Internet retailers that do not meet the requirements of having a physical presence (nexus) per SB 597 will be required to provide “…information to the Department of Taxation and purchasers in Virginia, including the amount paid for such purchases, for purposes of collection of the use tax due on such purchases.”

So, as RVANews puts it, “The days of perusing Amazon.com’s large inventory and adding discounted items into your digital shopping cart with no concern of paying a sales tax are coming to an end.” But not as quickly as brick-and-mortar stores would like. Amazon receives a special tax holiday in exchange for building two new fulfillment houses in Virginia this year. They won’t have to start collecting until September 2013.

According to one report, several retail store owners and representatives of retail organizations in Virginia feel that “…though they had hoped that Amazon would start collecting sales taxes before this year’s holiday shopping season…they were happy with the agreement as a compromise.”

In exchange for the compromise, Amazon plans to “…invest $135 million to open the centers, which would employ about 1,350 people.” The centers are currently slated to open in November 2012.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”