Group wants Amazon to collect sales tax in Virginia

The news that Amazon was opening distribution centers in Chesterfield and Dinwiddie didn’t thrill everyone.

To brick-and-mortar retailers, Amazon is the Galactic Empire of competitors. But the Alliance for Main Street Fairness wants to play the Rebel Alliance and is pushing back with a full-page ad in the Richmond Times-Dispatch and a campaign aimed at forcing Amazon to collect sales tax from Virginians.

According to Rob Shinn of Capital Results, a Richmond public relations and lobbying firm that represents the Alliance for Main Street Fairness, Amazon found a way to get around collecting sales tax by tinkering with their corporate structure. The retail giant doesn’t technically have a “physical presence” in Virginia, which would require them to collect sales tax, because their distribution centers run as a separate entity.

“This is clearly designed to skirt the intent of the [sales tax] law,” Shinn said.

Retailers argue that this gives Amazon a competitive advantage because retail stores have to collect sales tax and that makes items more expensive, even though users are supposed to include online shopping when they file their end-of-the-year taxes.

Amazon did not return a call seeking comment.

This isn’t a new issue for Amazon. Some states have successfully challenged this corporate structure. Most recently, Indiana announced a deal with the company that requires it to start paying sales tax in 2014.

That came after Simon Property Group, which owns Virginia Center Commons in Glen Allen and the massive Pentagon City mall in Arlington, filed suit.

Indiana estimated Amazon’s policies were costing the state about $20 million per year in tax revenue.

The news that Amazon was opening distribution centers in Chesterfield and Dinwiddie didn’t thrill everyone.

To brick-and-mortar retailers, Amazon is the Galactic Empire of competitors. But the Alliance for Main Street Fairness wants to play the Rebel Alliance and is pushing back with a full-page ad in the Richmond Times-Dispatch and a campaign aimed at forcing Amazon to collect sales tax from Virginians.

According to Rob Shinn of Capital Results, a Richmond public relations and lobbying firm that represents the Alliance for Main Street Fairness, Amazon found a way to get around collecting sales tax by tinkering with their corporate structure. The retail giant doesn’t technically have a “physical presence” in Virginia, which would require them to collect sales tax, because their distribution centers run as a separate entity.

“This is clearly designed to skirt the intent of the [sales tax] law,” Shinn said.

Retailers argue that this gives Amazon a competitive advantage because retail stores have to collect sales tax and that makes items more expensive, even though users are supposed to include online shopping when they file their end-of-the-year taxes.

Amazon did not return a call seeking comment.

This isn’t a new issue for Amazon. Some states have successfully challenged this corporate structure. Most recently, Indiana announced a deal with the company that requires it to start paying sales tax in 2014.

That came after Simon Property Group, which owns Virginia Center Commons in Glen Allen and the massive Pentagon City mall in Arlington, filed suit.

Indiana estimated Amazon’s policies were costing the state about $20 million per year in tax revenue.

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Casey Quinlan
Casey Quinlan
10 years ago

Sorry. I love brick and mortar stores, but I don’t shop Amazon because they don’t charge sales tax. I shop Amazon because I never have to worry about inventory availability or store hours.

Street retailers that offer something I can’t get elsewhere, combined with a great in-store experience, have my loyalty (can you say Lex’s of Carytown?) – otherwise, they lose to the convenience of online retail.

Welcome to the 21st century, Main Street.

Mark Egger
Mark Egger
10 years ago

State law requires retailers who have a physical presence in Virginia to collect the sales tax. Amazon has been given a free pass on this for years (they have had a distribution center in Northern Virginia for some time). They claim that their distribution center is not theirs, through some mumbo-jumbo from their corporate lawyers. Other huge corporations should try the same racket. WalMart could claim that they are an Arkansas corporation, and you are just picking your underwear up at a distribution center that is not really WalMart, hence they don’t need to collect the sales tax. Wonder how… Read more »

Jim Cathers
Jim Cathers
10 years ago
Reply to  Mark Egger

Well put, Casey Quinlan. I would imagine (and hope) that you and I represent a significantly large demographic group of Virginians with similar interests and buying behavior. I think I understand how a small business owner might convince him/herself that Amazon has an unfair advantage based on price point alone, but asking consumers to sacrifice more of their already-diminished purchasing power for the sake of the contrived principle of “fairness” alone seems like an artificially black/white argument to make when considering that numerous other contingencies are likely available. It seems to me that, rather than punishing consumers for taking advantage… Read more »

Mark Egger
Mark Egger
10 years ago
Reply to  Jim Cathers

Jim – We’re not talking about price points or free markets or the internet – we’re talking about the legal requirement for retailers to collect sales tax from purchasers. Amazon has been ignoring that law for years and Virginia has done nothing about enforcing their own law. Let me give you an example – if you purchase something on Target’s website, they will collect the sales tax from you because they are required by law since they have a physical presence in Virginia. But if you buy something from Amazon, they will not collect sales tax from you even though… Read more »

Rob Boyles
Rob Boyles
10 years ago

They don’t collect sales tax from distribution centers because they’re sole purpose is distribution not sales. If Amazon had a store that you could physically shop in and it was also for distribution then sales tax would be required.

Mark Egger
Mark Egger
10 years ago
Reply to  Rob Boyles

Sorry Rob, you’re incorrect. Any type of physical presence in the state requires you to collect the sales tax. Even having an administrative office in Virginia would require you to collect the sales tax if you sell to a Virginian on the internet. That’s the law. Like I said before, let’s have Walmart set up a sham corporation and say that you’re just picking your underwear up at Sham Corporation’s distribution center and it has nothing to do with Walmart which is an Arkansas corporation and therefore they don’t need to collect the sales tax on the underwear they sold… Read more »