30 Oct Amazon Now Collecting Sales Tax in Conn. and Mass.
Connecticut’s tax-free Amazon shopping ends Friday.
The e-commerce giant begins collecting Connecticut’s 6.35 percent sales tax as part of a settlement reached with state officials in February.
So, if you have that big-ticket Amazon item in your cart — such as that $259,000 Patek Philippe white gold diamond watch or the $29,000 liquid-cooled standby generator — you want to buy that before Friday.
With the Seattle-based company collecting the tax when you place your order, the state expects to bring in about $15 million a year in additional sales taxes. This year, starting the tax in November, the state still expects to bring in most of the total because it will include the holiday shopping season.
When it was announced, state officials presented it as a victory for the state’s traditional retailers, who previously had to compete with a major online retailer that didn’t have to charge a sales tax. Federal law does not require online retailers without in-state brick-and-mortar operations to collect state and local sales taxes.
“I know the business community in Connecticut is ecstatic about this,” Kevin Sullivan, commissioner of the state Department of Revenue Services, said in an interview. “It will be great to have Amazon in the house.”
It was also the resolution of a long-standing disagreement with the retailer. In 2011, the General Assembly passed a law that tied Amazon’s presence in the state to its affiliate businesses in Connecticut, and the company ended its affiliate program.
In Connecticut, what’s largely misunderstood, or perhaps overlooked, is that residents should have always paid sales taxes on online orders. But few ever did, state officials have said.
In the settlement that state officials reached with Amazon in February, the company agreed to begin collecting the sales tax and to build a $50 million distribution center in Connecticut, plans for which are underway in Windsor. In exchange, the state agreed to not pursue back taxes on past sales.
It was a deal that eluded federal lawmakers, who have yet to pass a nationwide measure that would force online retailers to collect state sales taxes. In May, an online sales tax bill passed the U.S. Senate that would require businesses with more than $1 million in revenue to collect sales taxes from customers. The bill, called the Marketplace Fairness Act of 2013, awaits a vote in the House.
“It is in big trouble,” Sullivan said. “Unless and until the Senate is prepared to make it a provision of something else that has to pass, it’s going to be awhile.”
Amazon has reached a number of similar deals throughout the country as it expands its physical footprint in an effort to offer quicker, even same-day deliveries.
Last week, Amazon announced three new distribution centers, two in Maryland and one in Florida, that will establish a physical presence for the company in those states. The company began collecting Virginia sales tax in September. And also on Friday, the company will start collecting Massachusetts sales tax.