Sales Tax Fairness Legislation Introduced in Virginia

Amazon Seeks Exemption in Florida

 Earlier this week, Virginia State Senator Frank Wagner (R-Virginia Beach) submitted sales tax fairness legislation requiring online retail companies that have a physical presence in Virginia to collect and remit sales tax on purchases by Virginia residents. Senate Bill 597 clarifies state sales tax laws so that companies with a physical presence in the state, such as a warehouse or distribution center, cannot use complex corporate structures to avoid collecting and remitting the state sales tax from customers. The bill is co-sponsored by a bipartisan group of senators.

On Tuesday, the American Booksellers Association e-mailed its bookseller members in Virginia to urge them to contact their state lawmakers in support of S.B. 597.

“The legislation will create a more level playing field for Virginia retailers,” said Senator Wagner, the chief sponsor of the bill, in a statement.  ”Companies with a physical presence in the state should all play by the same rules.”

The Virginia Alliance for Main Street Fairness [1], a coalition of retail companies and organizations dedicated to promoting the fair taxation of retail goods in the Commonwealth, noted that S.B. 597 is similar to legislation that passed in 2011 in Texas. The legislation states that companies with a substantial ownership interest in a warehouse or distribution center have the physical presence required for them to collect the tax. However, the Virginia legislation is unlike affiliate nexus bills passed in New York and other states, in that it does not address online affiliate nexus.

Amazon.com, which has two facilities in Virginia and has announced plans to open two more, has entered into voluntary agreements with four states where it has facilities to eventually collect the sales tax: California, Indiana, Tennessee, and South Carolina.

“States are moving quickly to address this loophole,” said Rob Shinn of the Virginia Alliance for Main Street Fairness. “It is simply a matter of fairness that will allow free market competition to determine winners and losers in the marketplace.”

Even as Virginia aims to close the sales tax loophole, Amazon.com is seeking a sales tax exemption in Florida that would be similar to the ones granted by Tennessee and South Carolina in 2011. According to the Associated Press [2], Amazon has told the state that it will bring between 2,500 and 3,000 jobs to Florida if state lawmakers and Gov. Rick Scott provide it with a two-year sales tax exemption.

The AP notes that Amazon.com may have a hard time convincing the state legislature to provide it with the exemption since the Republican-controlled legislature is already divided on whether or not to push ahead on bills that would attempt to force online retailers to start collecting the state’s six-percent sales tax from consumers. Brian Burgess, a spokesman for Gov. Scott, told AP that the governor’s office was also “aware of the proposal” but did not say if the governor would back the deal.