Amazon.com didn't take incentive in deal to collect Utah sales taxes

Amazon.com didn't take incentive in deal to collect Utah sales taxes

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SALT LAKE CITY— The state of Utah negotiated a deal for Amazon.com to start collecting sales taxes from Utah customers that does not include an incentive available in state law that would have allowed the online retailer to keep 18 percent of the revenue.

"Amazon was entitled to the 18 percent vendor discount under one reading of the statute," Utah State Tax Commission Chairman John Valentine said Friday, after obtaining a waiver from the company to discuss that portion of the confidential deal.

But Valentine said the state was "able to negotiate with Amazon for the standard 1.31 percent vendor discount that all the vendors in Utah get. So they got no more and no less than any other state vendor. They were treated the same."

It's not clear why Amazon.com agreed to pass on the higher rate available under a 2013 law intended to provide an incentive for out-of-state companies like Amazon that haven't been collecting Utah sales taxes to start charging their customers.

"It was a sticking point in the negotiations," Valentine said. "There was an ongoing negotiation about their status and that ongoing negotiation resolved into their status being at 1.31 percent just like the other vendors that are in the state."

The chairman said he could not disclose any other details of those negotiations.

What's known as a vendor discount permits companies to retain 1.31 percent of their sales tax collections "for the cost of serving as a collection arm for the state," as long as they are current on their filings, Valentine said.

The sponsor of the legislation creating the 18 percent incentive, Rep. Steve Eliason, R-Sandy, said it was meant to be extended to any company that agrees to voluntarily comply with sales tax laws in Utah.

Related:

Amazon is the first online company to sign a voluntary compliance agreement, Utah State Tax Commission spokesman Charlie Roberts said Friday. Amazon will begin collecting sales taxes from Utahns on Jan. 1 on purchases made directly from the company.

Companies like Amazon have not collected sales taxes in Utah because they have no physical presence in the state. States are seeking the authority to force such collections, either through the courts or Congress.

Gov. Gary Herbert, who announced the deal with Amazon during a discussion of his new budget on Wednesday, has called for the state to "aggressively" pursue the estimated $200 million in state sales taxes not being paid on online purchases.

Utahns actually owe the tax, whether it is collected by the retailer or not, and are supposed to remit it as part of their state income tax filings. But few Utahns actually comply.

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Lisa Riley Roche

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