Bill aims to clarify sales tax loophole - Ahwatukee Foothills News: News

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Bill aims to clarify sales tax loophole

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Posted: Tuesday, February 21, 2012 10:00 am

A bill working its way through the Arizona Legislature is hoping to make retail fairer by forcing and other online retailers that have a presence in Arizona to charge a state sales tax.

"Retail is a very competitive industry," said Michelle Ahlmer, executive director of the Arizona Retailers Association (ARA). "We don't mind competition but when you can't get over a 10 percent price difference that is due to sales tax, it makes it very hard for a local retailer to compete. What our bill does is it says if you have a presence in this state with a store front, a warehouse or a fulfillment center, that is retail and requires them to collect sales tax."

A recent study done by ARA estimates the state could recapture more than 5,400 jobs and stop future job loss by closing this tax loophole, according to an economic impact study released by Elliott D. Pollack & Company.

Sen. John McComish, R-Ahwatukee Foothills, a sponsor of the bill, said it's really about two things: fairness and collecting lost taxes.

"It's the fairness of it to the other retailers because they are selling the same product to the same person, but the Internet seller has an unfair advantage," McComish said. "It's a fairness issue on one hand. On the other hand there's a tax revenue that the state should be collecting that we're not. This bill would rectify those two situations."

According to the ARA study, beginning in 2010, there was an estimated $317 million in uncollected sales taxes, with that number expected to grow to $576 million by 2015.

Though not the only one affected by this legislation, Amazon appears to be a target. Because of its complex corporate structure, Amazon has been able to avoid collecting state sales tax from customers. Supporters of the bill don't believe it would have any negative effects on jobs in Arizona.

"Other retailers perform this function every single day," Ahlmer said. "Amazon was actually the platform for for a long time until Target terminated that relationship. They have the infrastructure. This isn't going to be a cost to them. The tax is a direct pass through to the consumer. We don't understand why it would have to cost any jobs here."

Ahlmer said California recently passed similar legislation in that state and Amazon did not leave California. McComish also pointed out that there is legislation with similar language going through Congress at this time.

"They're trying to do it federally and there are bills in Congress to address it, but Congress moves very slowly and we don't know when that will happen," McComish said. "In the meanwhile we're doing it in the state to implement it rather than wait for Congress. That's the hope of the bill." did not respond to multiple requests for comment.

• Contact writer: (480) 898-7914 or

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