Indiana House Passes Affiliate-Nexus/Warehouse Law

On Monday, February 4, the Indiana House of Representatives passed sales tax fairness legislation that would require remote retailers with nexus in the state via online affiliates or warehouses to collect and remit sales tax to the state beginning July 1, 2013.

The bill (HB1007), [1] which is sponsored by Rep. Tom Dermody (R, LaPorte), in effect moves up by six months the date that Amazon.com was set to begin collecting sales tax in the state under a previous agreement the online retailer made with former Governor Mitch Daniels. The legislation passed by a vote of 79 to 18 and has been referred to the Senate.

Rep. Dermody told the Associated Press [2] that the July start date would help Indiana retailers compete during this year’s back-to-school and Christmas shopping seasons. “This is about fairness,” he said. “This is trying to put everybody on a level playing field.”

Under the deal Amazon.com negotiated with Governor Daniels, the retailer was exempt from collecting sales tax until January 1, 2014, in exchange for opening warehouses in the state. Dermody’s bill would negate that agreement.

“Monday’s vote by the House to overwhelmingly pass sales tax fairness was a great victory for Indiana’s Main Street retailers,” said ABA CEO Oren Teicher. “It is clear that states are finally realizing that their in-state businesses are at a tipping point. Waiting another six months for sales tax equity, and losing another holiday season, simply perpetuates a competitive disadvantage and is just too much to ask. We are grateful for Rep. Dermody for standing up for Indiana’s businesses. We strongly urge the Indiana Senate to do the right thing and pass HB 1007.”

A study by the Indiana Fiscal Policy Institute and Ball State University researchers estimates Indiana loses up to $114 million a year in uncollected sales taxes in e-commerce purchases, as reported by the AP.

The prospect of the legislation’s approval by the State Senate is uncertain, and some Senate leaders have expressed concern about the state breaking Governor Daniels’ 2007 deal with Amazon.com, as reported by AP.