Two national trade associations applauded Wednesday’s announcement in which New Jersey Gov. Chris Christie reached an agreement with online behemoth Amazon.com requiring the online retailer to begin collecting state sales tax on purchases made in the state by July 1, 2013.
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The Retail Industry Leaders Association (RILA) issued the following statement in response to Christie’s announcement.
“Today’s announcement ends the practice of giving out-of-state retailers like Amazon.com an unfair advantage over those retailers who are an integral part of communities across New Jersey,” RILA President Sandy Kennedy said.
New Jersey joins 13 other states, including California, Texas and Virginia, who have taken action to close a decades-old loophole that impacts retailers.
Bipartisan legislation under consideration in the U.S. Senate and House of Representatives would provide states with the tools to apply equal treatment of the collection of sales taxes on remote sellers while minimizing administrative burdens and costs for remote sellers to collect and comply.
The 1992 Supreme Court decision, Quill Corp. vs. North Dakota, said states are not allowed to require out-of-state companies to collect sales taxes unless that company has a physical presence, such as a store or warehouse, in the state.
The Direct Marketing Association commended the action taken in New Jersey.
“The announcement is the result of a determination that Amazon has a presence in New Jersey,” according to the DMA. “As per the Supreme Court decision in Quill, if a marketer has a physical presence in a state, that state may require the marketer to become its sales tax collector. It remains the law of the land that a state cannot conscript an out-of-state marketer with no presence, and thus no political power, in the state to become that state’s tax collector.”
Amazon agreed to collect 7% sales tax on purchases made in New Jersey starting next summer, coinciding with the construction of two new distribution centers – each encompassing 1 million square feet. The two new distribution centers will create 1,500 permanent jobs. New Jersey officials estimate at least $30 million a year in new revenue.
In April 2008 New York became the first state to require out-of-state online retailers to collect state and local sales taxes.
Jim Tierney ([email protected]) is a senior writer for Multichannel Merchant. You can connect with him on Twitter (TierneyMCM) and LinkedIn, or call him at 203-358-4265.