Online Sales Tax—Amazon to Collect Taxes in Massachusetts

December 12, 2012—The Amazon tax man has gobbled up yet another state. On Tuesday, state officials and Amazon announced that Amazon.com would collect and remit sales tax in Massachusetts starting next fall. Earlier this year, Amazon acquired Kiva Systems, a Massachusetts firm, and started recruiting staff for a new office in Cambridge. According to a report published in Boston.com, these moves were enough to require Amazon to collect state sales tax.

The Governor of Massachusetts, Deval Patrick, also announced on Tuesday Amazon’s plan to create hundreds of high tech jobs in Massachusetts in coming years. Governor Deval Patrick said they would work together toward enactment of federal legislation to resolve the sales tax issue. The Massachusetts administration believes the addition of Amazon sales tax will add “lows of tens of millions per year” to state funds as a result of the agreement. “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.”

The Massachusetts tax is 6.25 percent of the sales price or rental charge on tangible personal property, including phone and mail order items or items purchased over the internet. The Secretary of Administration and Finance Jay Gonzalez said, “I appreciate Amazon’s willingness to work with us to reach an agreement that will benefit both the Commonwealth’s businesses and Massachusetts taxpayers. However, Massachusetts and other states will receive the majority of the revenue owed only when Congress passes federal legislation, and we encourage Congress to act.”

The agreement between Amazon and Massachusetts will take effect on November 1, 2013, just in time for the next holiday season.

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