A House panel on Wednesday approved legislation designed to get Gov. Jan Brewer to negotiate the same kind of tax-collection deal with Amazon.com that her counterparts elsewhere have obtained.
SB 1170 is similar to legislation company lobbyists already beat back twice in the Senate which would require that retailers with warehouses in Arizona immediately start collecting the state’s 6.6 percent, even if they have no stores here.
The plan, however, includes a sweetener designed to blunt the company’s opposition: It is prospective only, not kicking in until next year.
More to the point, it would absolve any affected retailer of any financial obligation that might have been incurred prior to that date. That would effectively wipe out a $53 million assessment the state Department of Revenue issued earlier this year against Amazon.com for unpaid taxes from March 1, 2006, through the end of 2010.
But Rep. J.D. Mesnard, R-Mesa, who crafted the plan, acknowledged more is at work.
“At the end of the day, I think the executive needs to be involved,” he said.
“Really, what this bill is, is what has happened in other states,” Mesnard explained. In fact, he noted, the language is virtually identical to a deal announced earlier this month by Virginia Gov. Bob McDonnell.
“I suspect Amazon would entertain this (in Arizona) if they had some greater assurance from the executive,” Mesnard said.
So far, though, Brewer has shown no public interest in making a deal.
Last year, after touring one of Amazon’s Arizona warehouses, the governor said she was not sure that states should be trying to collect taxes from companies like that. Instead, Brewer said she was “sure that the federal government will continue trying to address the issue.”
And press aide Matthew Benson said his boss sees no reason to negotiate, pointing out the Department of Revenue assessment.
Whether the state actually can collect that, however, remains unclear.
The company, in a filing with the Securities and Exchange Commission, called the assessment “without merit” and said Amazon intends to defend itself “vigorously” against the levy.
And Don Isaacson, who lobbies for Amazon, said Wednesday the company’s position is federal law precludes any effort by Arizona or any other state to force it to collect taxes solely because of the location of its warehouses.
Federal courts have said there needs to be a legal “nexus” between a retailer and a state to require collection of sales taxes. That covers not only sales from brick-and-mortar stores but also Internet sales from companies like Target.com because it also has stores here.
SB 1170 expands what constitutes that nexus to include warehouses. Target lobbyist Tracy Hester said that would end the competitive advantage Amazon has over the Internet arm her firm operates.
McDonnell’s announcement of the deal came as Virginia’s General Assembly gave final approval last week to its version of what Mesnard is pushing here.
“This bill helps to ensure that online retailers with a physical presence in Virginia are treated the same as traditional brick-and-mortar retailers who are already required to collect and remit existing sales taxes and goods sold in the commonwealth,” McDonnell said. And Virginia state Sen. Frank Wagner, who sponsored that state’s version of the bill, said his state would collect at least $23 million in taxes from Amazon next year.
Isaacson sidestepped questions about what his client has agreed to elsewhere
“Amazon has reached agreement in other states,” Isaacson conceded.
“That can’t be denied,” he continued. “I just can’t comment on that today.”
Benson refused to comment on Mesnard’s legislation, which now goes to the House Appropriations Committee. And he sought to distance Brewer from the measure.
“It is not her proposal,” he said. “And it is not something we are working on right now.”