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Amazon Agrees To Start Collecting Sales Taxes As Part Of Data Center Jobs Deal

May 29, 2015

Amazon has announced a Midwest expansion in central Ohio that will include one thousand well-paying jobs over the next several years. 

The deal between JobsOhio and the retailing giant adds a third data computing center in New Albany to previously announced centers in Dublin and Hilliard. The three new data and cloud computing centers will also bring in money to the state - dollars that are supposed to already be coming in but often do not. Ohio Public Radio's Karen Kasler explains.

Internet shoppers may or may not know this, but state and local sales taxes are required on those purchases, just like on purchases made in brick-and-mortar stores. And if the internet retailer doesn’t collect the sales taxes, the buyer is supposed to pay them anyway. Tax commissioner Joe Testa has been talking about this for years – including in an interview right around Black Friday in November 2012.

“It’s still the purchaser’s responsibility to pay that use tax,” said Testa. “If they don’t when the purchase is actually made, then what we recommend to people is that they keep track of those purchases throughout the year in which they didn’t pay sales tax and then calculate it on their personal income tax return, their 1040, at the end of the year, and pay it at that time.” 

Amazon is among the retailers that hasn’t been collecting sales taxes on purchases in Ohio – and wasn’t required to, because the company didn’t have a physical location in Ohio. Till now.  The deal that the company says will create more than a thousand jobs in three data and cloud computing centers in Ohio will also bring a change for Amazon buyers in Ohio. 

Gary Gudmundson with the state tax department said, “If you’re buying an Amazon product, they’re going to start charging Ohio sales tax and collecting it right when you are checking out.” 

Amazon’s Paul Misener said the retailer agreed to collecting sales taxes with the data center jobs deal, but it was the company’s idea, because there’s no federal requirement that online retailers collect local and state sales taxes. But he’s pushing for passage of a law that would. 

“What that does, it gives the states the right to make their own fiscal policy choices,” Misener said. “The governor [John Kasich] has talked about reducing taxes – that is an option to governors, but it’s not entirely available until Congress acts and makes available the revenue that’s already due. And so we voluntarily agreed to do this as part of our long-term partnership with the state.” 

Buyers should know the sales tax collection only to purchases from Amazon, and not to items bought from other retailers who also sell on the site. So buyers from those sites will still be expected to remit those taxes on their own.  There are no projections on how much money this could bring into Ohio. If a federal law passes to create a sales-tax collection system for all online sales across the country, Misener says Ohio could get as much as $300 million a year from all retailers selling on Amazon. And the Ohio Council of Retail Merchants has estimated that Ohio loses out on $200 million of sales tax revenue every year through voluntary payment of taxes for online purchases, since often internet buyers either forget to report them or simply don’t want to.