BOSTON — Amazon, the world’s largest online retailer, will begin collecting Massachusetts sales taxes starting next fall under a new agreement with the state that could net the commonwealth tens of millions of dollars next year, according to the Patrick administration.
Small businesses have been pressuring Gov. Deval Patrick to reach a deal with Amazon over sales tax collections in time for this holiday shopping season, but the agreement will not take effect until Nov. 1, 2013.
“I value the contributions large and small employers alike make to Massachusetts’ economic vitality, and this agreement captures that,” Patrick said in a statement. “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.”
Amazon will also support Massachusetts in its effort to promote a national solution to the issue of online retailers collecting sales taxes on purchases. A number of states, including New Jersey, have reached similar agreements with Amazon.
Administration and Finance Secretary Jay Gonzalez told the News Service that the Department of Revenue’s best estimate for sales tax collections in fiscal 2014 are in the low tens of millions, which will be factored into the state’s revenue estimates that economists and lawmakers are meeting this week to discuss.
“It’s not going to solve all of our revenue problems, but it’s going to help mitigate the erosion of sales tax revenues. That is a function of the fact that more and more people are buying stuff from remote Internet retailers and less from traditional brick-and-mortar retailers who are physically here in Massachusetts so it’s very good news,” Gonzalez said.
Under federal law, online retailers do not have to collect and remit sales taxes from customers to states where the company does not have a physical presence.