Amazon to Begin Collecting Sales Tax in Maryland and Massachusetts

As the U.S. House of Representatives continues to consider the issue of sales tax fairness, the list of states in which Amazon is collecting, or will collect, sales tax is growing.

On Friday, November 1, Amazon will start collecting sales tax on orders made by residents of Massachusetts. Last year, Massachusetts Gov. Deval Patrick announced that the state had reached an agreement in which Amazon.com would collect and remit sales tax in the state. As part of the agreement, Amazon promised to create hundreds of high-tech jobs in Massachusetts in the coming years.

“The collection of sales tax by Amazon in Massachusetts represents a victory for tax-policy equity and fairness in our state,” said David Didriksen of Willow Books & Café in Acton, Massachusetts. He noted, however, that until a federal solution is passed the in-state sales tax collection is only a partial victory for Main Street retailers. “The ultimate solution must come from Congress, via the Main Street Fairness Act, which has already passed in the Senate. We are pleased that Amazon will finally be playing by the same rules as all retailers in the Commonwealth. But retailers from every state need to continue to press for passage of a national solution to the glaring inequity of current sales tax laws.”

“This has always been a bigger issue for Main Street in Massachusetts than in other states due to our border with New Hampshire and our very tech savvy consumers,” said Jon Hurst, president of the Retailers Association of Massachusetts. “It is a significant step, but certainly it is not a final resolution until Congress finally acts to allow states more power to force remote sellers to collect the due tax.”

Maryland has also joined the list of states in which Amazon will collect and remit sales tax. Late last week, Maryland Comptroller Peter Franchot announced that Amazon’s decision to open a distribution center in Baltimore means the online giant will have nexus in the state and, as such, will be required to collect and remit sales tax on Maryland orders, as reported by WBAL.com.

However, Amazon is expected to receive $40 million in state and local tax credits in exchange for building the facility, and the company has promised to bring 1,000 jobs to the distribution center. WBAL reports that each job will “cost taxpayers about $40,000 in tax credits.”

Franchot told WBAL News that the state loses “$170 million to $200 million a year in sales tax revenue,” from online sales where sales tax is not collected.

Franchot did not provide a date as to when Amazon would begin to collect sales tax in Maryland.