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Amazon Agrees to Collect Sales Tax in Massachusetts in 2013

  • Dec 12, 2012 | Will Frei

Amazon will begin collecting sales tax in Massachusetts beginning November 1, 2013, announced the office of Massachusetts Governor Deval Patrick. In addition, Amazon will work together with Massachusetts ". . . toward enactment of federal legislation to resolve the sales tax issue by creating an equitable and simple framework for collecting sales tax." 

Currently remote sellers, including online retailers, do not have to collect sales tax in a state where they have no significant physical presence, per the U.S. Supreme Court Decision, Quill v. North Dakota. Yet, Amazon has purchased a robotics company in Massachusetts and operates a research office in the state, prompting certain parties to argue that this gives Amazon the obligation to collect state sales tax. It appears that Amazon agrees. The company begins collecting Massachusetts sales tax in 2013 and also ". . . plans to create hundreds of high tech jobs in Massachusetts in coming years."

"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,” said Governor Deval in an official press release.

The release also quotes 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 went on to say that Federal legislation regulating sales tax law for remote sellers 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."

Just how much revenue does a state like Massachusetts stand to gain from such Federal legislation? No one knows for certain. However, according to a study by The Massachusetts Main Street Fairness Coalition, Massachusetts could generate an additional $878 million in revenue by 2020, if they could require remote sellers with no physical presence in the state to collect sales tax.

Misner's comments remind us that although Amazon has reached an agreement with Massachusetts, larger questions of online sales tax remain unanswered. Even as Massachusetts announces its agreement with Amazon, some federal legislators are working to pass online sales tax legislation in the current lame duck session of Congress.

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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.