Virginia Senate Committee Unanimous in Support of Sales Tax Fairness

On Tuesday, February 7, the Virginia State Senate Finance Committee unanimously passed Senate Bill 597, legislation that would require retailers with warehouses or distribution centers in Virginia, such as Amazon.com, to collect and remit sales tax for purchases made by Virginia residents. The proposed legislation 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 state sales tax from customers. SB 597 is sponsored by Sen. Frank Wagner (R-Virginia Beach).

The legislation now heads to the Senate floor for a vote that will likely take place by the end of this week. ABA is calling on its bookstore members in Virginia to contact their state lawmakers and urge them to support the bill.

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

Under current Virginia law, companies and their subsidiaries with warehouse or distribution centers in the state are required to collect and remit sales tax. Among the companies that have established a separate distribution subsidiary is Amazon.com, which does not collect sales tax on purchases by Virginia residents.

“We are extremely pleased with today’s vote,” said Rob Shinn of the Virginia Alliance for Main Street Fairness [1] (VAMSF), a coalition of retail companies and organizations dedicated to promoting the fair taxation of retail goods in the state.  “It demonstrates the strong will of state legislators to close the loophole and treat all retailers on a consistent basis.”

Amazon currently operates a facility in northern Virginia and will open two additional centers in central Virginia in the near future.  Amazon has entered into voluntary agreements with four states — California, South Carolina, Indiana, and Tennessee — to collect their state sales tax as early as this September 1, VAMSF noted.  Pennsylvania is also requiring online retailers with a physical presence to collect and remit the sales tax by September 1 of this year.  Other states, including Arizona and Texas, have assessed Amazon for delinquent taxes stemming from similar corporate structures.  The Seattle-based company acknowledges physical presence in Washington State. Legislation is pending in several other states.