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Michigan Latest to Voice Amazon Tax Concerns

19 Jul, 2012 By: Chris Tribbey

Michigan brick-and-mortar retailers have asked the state’s treasurer to send a tax bill to Amazon, arguing that Amazon has a physical presence in the state via a subsidiary.

“Because Amazon has a physical presence in Michigan, it has sufficient nexus with the state and should be collecting sales tax for Michigan-based online purchases on its website,” James P. Hallan, president and CEO of the Michigan Retailers Association, wrote in a letter to state treasurer Andy Dillon. “We urge [the] treasury … to send a bill to Amazon for sales tax owed.”

Amazon acquired Michigan-based audio books company Brilliance Audio in 2007. A 1992 Supreme Court ruling determined a physical presence is required in order for states to impose taxes on retailers.

“Amazon has avoided collecting taxes on its Michigan sales for years,” Hallan said. “That harms Michigan’s economy, is unfair to Michigan-based job providers and must stop. Other states have compelled Amazon to start paying taxes, and Michigan must do the same.”

The state treasurer has not acted on the request, and Amazon has not commented.

The Michigan dust-up over taxes is just the latest in a long battle Amazon has had with states when it comes to sales tax.

On July 1, Texas became the sixth state to begin collecting sales tax on Amazon purchases, thanks to an agreement the two struck in April. The agreement has Amazon creating 2,500 jobs and making at least $200 million in capital investments in the state over four years.

Amazon has consistently said it wants the tax laws to be changed on the federal level, instead of dealing with it state by state.

“We strongly support the creation of a simplified and equitable federal framework, because Congressional action will protect states’ rights, level the playing field for all sellers, and give states like Texas the ability to obtain all the sales tax revenue that is already due,” said Paul Misener, Amazon VP of global public policy, when the deal was reached.

The Alliance for Main Street Fairness, which is dedicated to closing online sales tax loopholes, noted that Sens. Mike Enzi (R-Wyo.), Dick Durbin (D-Ill.) and Lamar Alexander (R-Tenn.) have introduced revised legislation “in an effort to ensure passage of federal e-fairness legislation this year.”

“Now it is time for the rest of our leaders in Washington to finally stop picking winners and losers in the marketplace and give Main Street retailers a chance to compete on a level playing field,” said Danny Diaz, spokesman for the Alliance for Main Street Fairness.

In late May, Amazon reached an agreement with New Jersey to begin collecting sales tax starting in July 2013, along with making a $130 million capital investment and creating 1,500 full-time jobs. In September 2011, Amazon and California reached an agreement that will see Amazon collecting sales tax there beginning September 2012.

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