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December 12, 2012

Amazon to begin collecting Mass. sales tax next year

BOSTON — Amazon, the world’s largest online retailer, will begin collecting Massachusetts sales taxes starting next fall under a new agreement with the state that could net the state tens of millions of dollars next year, according to the Patrick administration.

Small businesses have been pressuring Gov. Deval Patrick to reach a deal with Amazon over sales tax collections in time for this holiday shopping season, but the agreement will not take effect until Nov. 1, 2013.

“I value the contributions large and small employers alike make to Massachusetts’ economic vitality, and this agreement captures that,” Patrick said in a statement. “We are thankful Amazon was willing to come to the table and we will continue our conversations with them about creating jobs here. This agreement is a win for all sides, and I am pleased it promises to generate millions in long-term revenue for the commonwealth.”

Amazon will also support Massachusetts in its effort to promote a national solution to the issue of online retailers collecting sales taxes on purchases. A number of states, including New Jersey, have reached similar agreements with Amazon.

“It’s not going to solve all of our revenue problems, but it’s going to help mitigate the erosion of sales tax revenues,” Administration and Finance Secretary Jay Gonzalez said.

Under federal law, online retailers do not have to collect and remit sales taxes from customers to states where the company does not have a physical presence.

Amazon purchased a robotics company in North Reading earlier this year, and opened a research office in Kendall Square in Cambridge, establishing what some officials suggested was the “brick and mortar” nexus necessary for the state to force the company to collect the taxes from online shoppers.

The related business interests, however, are unlike the distribution facilities directly related to its online retail operations that other states have used to force agreements, Gonzalez said. More than a dozen states have reached deals with Amazon over tax collections, including Nevada, Texas, California and Pennsylvania.

Though some of those states struck direct agreements with Amazon to build new facilities or create jobs, Massachusetts officials said Amazon only committed to growing here in the future in its related business ventures. Gonzalez said through the negotiation process state officials built a good relationship with Amazon and believe Amazon sees Massachusetts as a “growth area” and plans to “ramp up” its presence.

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