Amazon.com says it would be illegal but Arizona legislators are moving ahead with a bill that would require the online retailer to collect sales tax on purchases by state residents.
A bill pushed by brick-and-mortar merchants and unanimously endorsed by a Senate committee Wednesday would classify Seattle-based Amazon as an in-state retailer for tax purposes because a subsidiary has distribution centers in the state.
"The state is effectively subsidizing a discount equal to the sales tax. As a retailer, I just want an equal playing field," said Lance Muzslay, owner of three athletic-shoe stores in Phoenix suburbs.
Amazon contends it doesn't have to collect sales tax on sales to Arizonans because the parent company doesn't have a physical presence in the state, and an Amazon lobbyist told the Senate committee the bill would violate a state constitutional prohibition on bills targeting specific individuals or companies.
"This bill applies to one company and one company alone and should be rejected on that basis," said the lobbyist, Don Isaacson.
Isaacson also urged lawmakers to simply wait for passage of national legislation creating a uniform and simplified system for collecting sales taxes.
On the other side of the issue, Arizona Retailers Associations members support the legislation, including "big box" stores such as Target and Best Buy and smaller merchants.
The bill doesn't identify Amazon by name, and retailers said it's both legal and fair, with thousands of jobs at stake.
"This is about jobs. When retailers sell more goods, they employ more people. It's as simple as that," said Michelle Ahlmer, executive director of the Arizona Retailers Association.
Arizonans are required by law to pay sales tax on online purchases, but few do and there has been no enforcement push until lawmakers last year decided to put a reporting requirement on individuals' income tax return.
Returns filed this spring for 2011 will be the first covered by that reporting requirement, but the bill and a separate bill pending in the House would repeal the requirement.
Amazon said last year that the addition of its fourth "fulfillment center" in the Phoenix area would take its Arizona work force over 3,000.
But Isaacson said Wednesday the company has a permanent Arizona work force of 5,000, with pay starting at $35,000 and providing health benefits and stock options. "These are good jobs," he said.
Amazon recently disclosed in its annual report that the Arizona Department of Revenue has issued the company a bill for $53 million for uncollected sales tax and interest. The company has said it is contesting the assessment.