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This week, American Booksellers Association CEO Oren Teicher urged the Massachusetts Department of Revenue (DOR) to require Amazon.com to collect and remit sales tax on orders made by Massachusetts residents. Teicher’s letter was prompted by news that Amazon.com is opening an office in Kendall Square in Cambridge, Massachusetts.
In the letter addressed to Amy Pitter, commissioner of DOR, Teicher wrote: “The 1992 North Dakota v. Quill Supreme Court decision as to what constitutes a physical presence in a state is clear: a remote retailer that has a store, warehouse, sales agent, or office in the state is considered to have a physical presence in the state, and, as such, is bound to follow the state’s sales tax laws. Once its office is open, Amazon.com should be required to collect and remit sales tax in the state. Our member bookstores follow the sales tax law; we believe Amazon.com should do so as well.”
In many states where Amazon.com has opened facilities, the online retailer is not fulfilling its obligation to collect sales tax. However, Teicher noted, “This has begun to change in the past couple of years as more and more states facing huge budget deficits searched for reasons for their revenue losses. Of course, one key reason for the budget shortfalls was the ever-growing loss of sales tax revenue in the state. This was because many consumers would shop at out-of-state online retailers with the mistaken belief that they were enjoying ‘duty free’ shopping, unaware that they owed a use tax to the state.”
Teicher’s letter concludes: “We do hope that Massachusetts will stand by its Main Street businesses and treat Amazon.com just as it does every in-state business. With an Amazon.com office in the state, there is no question that the online retailer now has nexus in the commonwealth. Your department expects our members to follow existing sales tax law and they certainly do. We hope you expect the same compliance from your newest in-state business, Amazon.com.”
The full text of Teicher’s letter is below.
Ms. Amy Pitter, Commissioner
Massachusetts Department of Revenue
P.O. Box 7010
Boston, MA 02204
Dear Ms. Pitter:
On March 7, the Boston Globe reported that Amazon.com will soon be opening an office at Kendall Square in Cambridge. On behalf of our many independent bookstore members in Massachusetts, we urge the Department of Revenue to now require Amazon.com to collect and remit sales tax to the state for orders made by Massachusetts residents — just as Massachusetts does for every in-state retailer.
The 1992 North Dakota v. Quill Supreme Court decision as to what constitutes a physical presence in a state is clear: a remote retailer that has a store, warehouse, sales agent, or office in the state is considered to have a physical presence in the state, and, as such, is bound to follow the state’s sales tax laws. Once its office is open, Amazon.com should be required to collect and remit sales tax in the state. Our member bookstores follow the sales tax law; we believe Amazon.com should do so as well.
In a number of states, Amazon.com has opened facilities but is not fulfilling its obligation to collect and remit sales tax, much to the detriment to Main Street businesses as well as the states’ economies.
This has begun to change in the past couple of years as more and more states facing huge budget deficits searched for reasons for their revenue losses. Of course, one key reason for the budget shortfalls was the ever-growing loss of sales tax revenue in the state. This was because many shoppers would shop at out-of-state online retailers with the mistaken belief that they were enjoying “duty free” shopping, unaware that they owed a use tax to the state.
In response, in states where it plans to open facilities, Amazon.com now seeks to garner temporary sales tax exemptions via legislative means in exchange for the promise of jobs. But the offer of job creation is contingent on the delivery of sales tax exemptions.
For our independent bookstore members, sales tax fairness is not a new issue. They’ve been working under the shadow of this unfair competitive disadvantage since the debut of online retailing. Our members are savvy business people and can compete with any business on a level playing field, but they cannot compete with any remote retailer that is being provided a subsidy in the form of a sales-tax break from their own state government. No Main Street business can. And, over time, it’s not just Main Street that has been hurt by this sales tax inequity — it’s the entire community.
We do hope that Massachusetts will stand by its Main Street businesses and treat Amazon.com just as it does every in-state business. With an Amazon.com office in the state, there is no question that the online retailer now has nexus in the commonwealth. Your department expects our members to follow existing sales tax law and they certainly do. We hope you expect the same compliance from your newest in-state business, Amazon.com.
Sincerely,
Oren Teicher, CEO
American Booksellers Association