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The Verde Independent | Cottonwood, Arizona

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2/8/2012 2:37:00 PM
Senate panel unanimously agrees Arizona law should be change on e-commerce
Michelle Ahlmer, executive director of the Arizona Retailers Association, explains legislation filed by Sen. Al Melvin which they said is designed to force online retailers with some presence in the state to start collecting the state sales tax. (Capitol Media Services photo by Howard Fischer)
Michelle Ahlmer, executive director of the Arizona Retailers Association, explains legislation filed by Sen. Al Melvin which they said is designed to force online retailers with some presence in the state to start collecting the state sales tax. (Capitol Media Services photo by Howard Fischer)

Howard Fischer
Capitol Media Services


PHOENIX -- Ignoring a threatened lawsuit, a Senate panel voted Wednesday to revamp the laws specifically to force Amazon.com to start collecting and paying state sales taxes on items shipped to Arizona residents.

The unanimous vote came after complaints by Arizona merchants and groups that represent them that they are at a competitive disadvantage because they have to collect the state's 6.6 percent levy as well as local taxes that can add 10 percent to the cost of a sale. The same tax applies to online retailers who also have stores in the state, like Best Buy and JCPenney.

But the current law exempts those involved in e-commerce without retail outlets.

Sen. Al Melvin, R-Tucson, acknowledged he is legally powerless to go after all online sellers. Federal courts have said states can impose their taxes only when a retailer has a legal "nexus' with the state.

But his legislation, SB 1338, expands what constitutes that nexus to include having a warehouse or other distribution center in Arizona.

"Under this bill, Amazon is the targeted loser,' complained Don Isaacson who lobbies for the company.

He told members of the Senate Committee on Commerce and Energy that, at the very least, the measure is unfair because it singles out his firm while letting other companies without Arizona stores continue to escape having to collect and pay the tax.

More to the point, Isaacson said the measure is crafted so as only to impact his client. And that, he said, violates a state constitutional provision which prohibits legislators from enacting "special laws' designed to impact just a single person.

But committee members were more swayed by the testimony of others.

"By effectively exempting some online businesses from having to pay sales tax, the state is effectively subsidizing a discount equal to the sales tax,' complained Lance Muzslay, owner of Sole Sports Running Zone. And he said the temporary one-cent hike in the state sales tax approved by voters in 2010 only exacerbated the problem.

Muzslay said online retailers will maintain some advantage over stores like his because of the convenience of shopping online. But he said the state should not take sides.

"As a retailer, I just want an equal playing field,' he said.

Economist Danny Court, citing the results of a study conducted for the Arizona Retailers Association, said he believes Arizona loses about $150 million a year in sales taxes to online sales.

Court said his study also showed that if online retailers had to collect the same sales tax as brick-and-mortar retailers, about 24 percent would choose to shop at a local merchant. He said that would create 4,000 direct jobs and another 1,000 indirect ones.

Isaacson said if lawmakers are concerned about jobs they should think about the 5,000 people that Amazon.com employs at its distribution centers, jobs he said start at $35,000 a year and pay benefits.

He said there is a solution to Arizona's concerns: legislation now being considered at the federal level. Isaacson said that measure would spell out clearly that online retailers have to collect each state's sales taxes.

Isaacson conceded, though, it's not that simple.

To participate, Arizona would have to change its own laws to ensure that cities, which can have their own sales tax rules, conform to those of the state. Isaacson said that is necessary to ensure that retailers have only 50 separate taxing jurisdictions to deal with rather than the 9,000 nationwide.

Jay Kaprosy who lobbies for the Arizona Retailers Association, told lawmakers that's why Arizona should act now and not wait for a federal fix.

The legislation, which now needs full Senate approval, does contain something designed to help the average Arizonan, too.

State law spells out that individuals who purchase items from out-of-state retailers are supposed to compute what would have been the sales tax and pay that to the state. But with that law little enforced, legislators voted last year added a line to individual income tax forms requiring every filer to declare what he or she owes, with a penalty for failing to comply.

The bill scraps the reporting requirement. And if it becomes law, it will exonerate anyone who fails to fill in that line on the report from facing any penalty.

ICT - Taylor Waste
Related Stories:
• Editorial: Online sales tax collections needed to keep playing field level
• State begins serious push to collect sales tax from online retailers


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Reader Comments

Posted: Friday, February 10, 2012
Article comment by: Think About It

This Is Bogus: You don't need schools because you don't have kids. Just who do you think is going to pay your Social Security when you get older? Just who do you think will be changing your Pampers? Give our kids a break and support education.

Posted: Thursday, February 9, 2012
Article comment by: Gregory Aston

On-Line companies should charge sales tax. There is no excuse not to charge sales tax, The lost revenue & advantage it gives on-line merchants over local brick & mortar store that create local jobs outwiegh any downside. If anything it should be implemented nationwide.

Posted: Thursday, February 9, 2012
Article comment by: Bad Gremlin

Perhaps we need to thin the legislature a little.

Posted: Thursday, February 9, 2012
Article comment by: Carl Nye - Jerome

Why shop online? Simple example - I was looking for a pulse-oximeter recently. Walmart had one, Walgreens had two. Amazon had over a dozen different models, from less expensive than the local ones to more expensive. Local merchants simply cannot (and will never be able to) stock this amount of merchandise. Whether the pricing "playing field" is leveled or not, the availability of products "playing field" will always be more favorable to online merchants with huge warehouses. I agree that if this discriminatory bill becomes law, the chances of Amazon keeping their "nexus" warehouse in Arizona are slim to none. Isn't it interesting that the photo shows the Executive Director of the Arizona Retailers Association explaining the proposed bill rather than Senator Melvin, who introduced it. More often than we know, it it the lobbyists who write the proposed legislation, and then find some willing legislator to introduce it. In this example, the benefactor of the bill boldly tells the news people what "Senator Melvin's" bill is all about.

Posted: Thursday, February 9, 2012
Article comment by: The Goatherder

Typical short sighted maneuver on the part of our bought and paid for legislature. Amazon will simply relocate, costing hundreds of jobs.

Posted: Thursday, February 9, 2012
Article comment by: no new taxes unless we say so

Arizona government wants any extra tax revenue stream they can get because of the continuing housing devaluation mess and lower current and future property tax payments (among other things like pressuring undocumented people to leave the state) and this "Amazon is unfair competetion" is an excuse to move the initiative forward. I thought Republican majority Arizona stood for no new taxation?

Posted: Thursday, February 9, 2012
Article comment by: This is Bogus

So Amazon pulls their warehouse, and other warehouses do the same. This is just plumb stupid. I shop 'amazon for fun things because they are cheaper. Adding the sales tax means either II don't spend my money at all or I go look for someone else. This sales tax thing is getting way out of hand. We have an income tax, property tax, gouge our visitors and now you want more money?

Other than groceries, I won't shop local because of the sales tax. I get nothing in return. I don't need cops, I have a gun. I don't need schools, I have never had kids. Most of the highways are paid for with gas tax, and now the greedy buzzards in Phoenix want more. Maybe they should become their own state and tax everyone 60%.






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