Amazon Seeks Tax Exemption in New Jersey, Announces New Warehouse in Delaware

In what has become a familiar scenario, Amazon.com is promising New Jersey that it will open two warehouses in the state in exchange for a significant sales tax exemption, in this case for 22 months. But as New Jersey officials argued about the merits of granting Amazon.com the exemption, the online retailer announced plans to open a $90 million, 1.2 million-square-foot warehouse in Middletown, Delaware, a state that does not collect and remit sales tax, as reported by the New Jersey Star-Ledger [1].

New Jersey State Assembly Majority Leader Lou Greenwald (D-6) is involved in the discussions with Amazon.com, and he is in favor of the 22-month exemption for Amazon.com, as reported by the Asbury Park Press [2]. In return, Amazon.com officials are promising a potential 1,500 full-time jobs in New Jersey, where the unemployment rate is nine percent. Amazon would take over existing space in two locations, and each warehouse would be 1.2 million square feet, the article noted.

According to published reports, however, some state lawmakers have balked at the length of the sales tax exemption. “It’s obvious that Amazon wants to be greedy,” state Sen. Raymond Lesniak (D-Union) told NJBIZ.com [3]. Allowing such a lengthy sales tax exemption “hurts New Jersey mom-and-pop stores and the retail industry in general.”

“It’s very hard to believe that Amazon.com’s Delaware announcement is unrelated to the company’s negotiations with the State of New Jersey,” said ABA CEO Oren Teicher. “As more states make clear their intentions to equitably enforce sales tax laws for online sales, Amazon.com is increasing its efforts to secure special exemptions from its obligation to collect and remit sales tax.”

Teicher stressed that economic studies, such as the one recently released in Arizona, have shown these exemptions “can end up actually costing states jobs and important revenue.” Pointing out that Amazon.com already has a presence in New Jersey through its subsidiaries, Teicher said, “as such, it should be collecting and remitting sales tax to the state right now. We urge state officials to send a very important message by equitably enforcing sales tax laws, standing up for its in-state businesses, and telling Amazon.com that it has to play by the same rules as every other business in the state.”

Harvey Finkel, the proprietor of the Clinton Book Shop [4], in Clinton, New Jersey, said, “The politicians in Trenton who want to negotiate a sweetheart deal for Amazon at the expense of New Jersey retailers need to come to my book shop and see the damage that’s already being done to my business. Thousands of New Jersey retailers, including myself, have been on the losing end of this bad deal for years and Amazon’s time is up. New Jersey would literally be giving away the store if this deal goes through because a delay in collection means more businesses can’t compete and will close their doors well before 2014. It’s happening now. It’s time to level the playing field now and end this massive loophole for online giants that are threatening small businesses across the state. This is too important to small business for Trenton to get it wrong.”

ABA is calling on its bookstore members in New Jersey to call their state lawmakers immediately and urge them to say no to the Amazon.com sales-tax exemption. “Our members in New Jersey abide by the law,” said Teicher. “It is only right that any other retailer with nexus in the state do so as well. Tell your legislators, no exemption for Amazon.com.”