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February 5, 2013

Online sales tax collection clears Indiana House

INDIANAPOLIS — Amazon.com and other online-only retailers would have to start collecting Indiana's 7 percent sales tax this summer under legislation overwhelmingly approved Monday by the Indiana House that would negate an agreement between Amazon and former Gov. Mitch Daniels.

The House voted 79-18 in favor of requiring online retailers to start sales tax collections in July — six months earlier than planned under the deal Daniels reached with Amazon last year.

While supporters in the House argued that the state's current policy gives online-only retailers an unfair advantage over traditional stores, the bill faces uncertain prospects in the Senate, where some leaders are worried about the consequences of breaking the deal with Amazon.

Rep. David Wolkins, R-Winona Lake, said during Monday's House debate that Amazon had met its obligations to the state by opening five large warehouses and that forcing the earlier tax collection would undermine Indiana's reputation when it comes to business negotiations.

"If I were the CEO of a company looking at Indiana, I'd say 'Why should I believe you?'" Wolkins said.

The state's current policy dates to a 2007 deal with Amazon, which agreed to open its first warehouse in Indiana with the promise that lawmakers wouldn't push for online sales tax collection.

The bill would require all online-only retailers with a physical presence in Indiana to collect sales taxes, while exempting online retailers doing less than $10,000 in business a year in the state. Retailers with Indiana stores are already required to collect sales taxes for online transactions.

Rep. Matt Pierce, D-Bloomington, told House members he didn't believe Daniels ever had the authority to allow Amazon to ignore a state law requiring sales tax collections without involving the Legislature in the decision.

"I think that we need to send a message to all the governors going forward ... that you need to come here and ask us to change the law," Pierce said.

Republican Gov. Mike Pence, who succeeded Daniels last month, and Lt. Gov. Sue Ellspermann on Friday visited a new Amazon distribution center in Jeffersonville, where the company says it will eventually have some 1,000 workers.

Ellspermann said Monday that she didn't know of any discussions with Amazon officials about the sales tax issue and that she didn't know whether Pence had an opinion about the bill approved by the House. Pence spokeswoman Kara Brooks said the governor's office didn't have any immediate comment.

The Associated Press left messages seeking comment Monday from Amazon officials and the Indiana Economic Development Corp.

Republican House Speaker Brian Bosma, who frequently doesn't vote on bills, was among those voting in favor of the online sales tax bill.

It isn't clear how much money the state might receive from additional sales tax collections.

A study completed last year by the Indiana Fiscal Policy Institute and Ball State University researchers estimates the state loses up to $114 million a year in uncollected sales taxes on Internet purchases, while the state collected about $6.6 billion in sales taxes during the 2012 budget year.

Rep. Tom Dermody, R-LaPorte, said he sponsored the sales tax bill because Amazon has had plenty of time to prepare for collecting sales taxes and has agreements with five states to start doing so earlier than its Indiana deal.

Dermody said the July start date would help Indiana retailers better 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."

 

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