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Amazon Nexus in Massachusetts: Time to Collect?


Amazon plans to open a new research and manufacturing center in Cambridge Massachusetts, and the Massachusetts Main Street Fairness Coalition wants to make sure they collect sales tax

The new Amazon center would give the company a physical presence, or nexus, in the state. Massachusetts law mandates that a vendor with nexus in the state, who sells goods or services in Massachusetts must collect and remit the 6.25% sales tax.

However, the Coalition fears that Massachusetts will make an exception for Amazon, who has negotiated with other states for tax-free windows. For instance, Amazon agreed to build two new fulfillment houses in Virginia in exchange for not having to collect sales tax until 2013.

A spokesman for the state’s economic development arm denied that the state had any deal with Amazon. Yet the Coalition wants an official declaration that Amazon will indeed be required to collect sales tax. “It’s only fair that our state officials act now to ensure that Amazon is required to do what every other Massachusetts business is required to do with respect to collection of sales taxes,” said Kimberley Driscoll, mayor of Salem and Coalition co-chair.

A Coalition estimate states that requiring Amazon to collect sales tax will generate an additional $25 to $45 million in revenue for the state.

The attention generated by Amazon's move to Massachusetts also brings to the fore the question of federal legislation that would require all online retailers to collect sales tax. The Boston Business Journal reports, "With so much interest from a number of different stakeholders, some expect the issue might finally be addressed by federal lawmakers."

Amazon itself has come out in favor of federal legislation, stating in 2011 that it supports the Marketplace Fairness Act, which would require online retailers to collect sales tax at the point of purchase.

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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
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.