Massachusetts Mayors Urge Governor to Require Amazon to Collect Sales Tax

A coalition of eight Massachusetts mayors have written to Gov. Deval Patrick to urge him to require that Amazon.com collect and remit sales tax for purchases made by Massachusetts residents prior to the holiday shopping season. Amazon recently purchased a robotics company based in North Reading, and, earlier this year, the company opened a research office in Cambridge.

In the letter, the mayors wrote: “We have read the news reports that you are in contact with Amazon and have plans to discuss this matter with them. We applaud you for your leadership and urge you to move aggressively this fall so that Amazon is in full compliance with Massachusetts tax laws by the time the all-important Christmas shopping season begins.”

The letter was spearheaded by Salem Mayor Kim Driscoll, co-chair of the Massachusetts Main Street Fairness Coalition (MMSFC), whose members are retailers, local elected officials, labor unions, trade and business associations, and individuals, all working to level the playing field between online and traditional retail businesses. 

MMSFC estimates that by forcing Amazon to collect sales tax on in-state purchases, the Commonwealth could net an additional $25 to $45 million dollars.

“Every morning when a Massachusetts retail business opens, he or she starts at a 6.25 percent price disadvantage to online giants like Amazon.com,” the mayors noted in their letter. “Because of a loophole created by a U.S. federal court decision two decades ago, online retailers are not required to collect sales tax due on most online purchases unless they have a physical presence in a state, giving them a huge advantage over traditional ‘Main Street’  businesses, [that] are struggling to keep their businesses open in a very tough economy.” (Read the letter in full here [1].)

Though Patrick has not yet publicly responded to the mayors’ letter, on Thursday, September 27, the governor made his monthly appearance on WTKK’s “Ask the Governor” segment and was asked about sales tax fairness and Amazon.com.

“In our case, Amazon is interested in expanding their presence here in Massachusetts and we are engaged with them on that and entering into an agreement to collect Massachusetts sales taxes,” the governor said on the show. “As a gesture of their interest in that they’ve been willing to engage in conversations just like they’re having with us right now in the places where they have a substantial physical presence.  So that’s what we’re in the midst of, and we hope to close out those talks soon.”

In addition, earlier in the week, state Treasurer Steven Grossman told State House News [2] that if the state collected sales tax on remote online sales, it could add $339 million in revenue, which could go to fund transportation infrastructure.

“We have a half-million people that work in the retail sector; bookstores and others are at a competitive disadvantage,” Grossman told SHN. “They lose lots of sales because they don’t get  a chance to sell at a competitive price. Amazon is selling books at 6.25 percent lower prices than you can get them at a little bookstore.”

American Booksellers Association CEO Oren Teicher and MMSFC have both written to the Massachusetts Department of Revenue (DOR) on the issue.