Amazon.com will start collecting sales tax in Georgia beginning Sept. 1, the online retailer confirmed Friday exclusively to The Atlanta Journal-Constitution.
Retailers operating brick-and-mortar stores welcomed the news as helping to level the playing field with online competitors. Not charging sales tax allowed Amazon to undercut in-store prices, they said.
“It makes a difference to those brick and mortar folks who lost business,” said Rick McAllister, president of the Georgia Retail Association. “I’m certainly delighted.”
While some shoppers commenting on AJC.com said they shopped on Amazon for the tax savings, others seemed resigned to the fact that they would soon be paying more.
“Even with tax added on, it probably won’t be as much as things at the mall,” said Monia Hicks, who lives in Sandy Springs. Hicks, a college student, has free shipping through Amazon Prime and uses the website to buy everything from books to earrings.
Georgia passed a law last year that went into effect in January and was intended to collect taxes from Amazon and other online retailers. Online sellers that did not charge sales tax to shoppers claimed they did not have to because they did not have offices or employees in the state. Companies that have stores or workers in the state have always had to charge online shoppers sales tax.
Amazon made deals with some states, agreeing to build distribution centers or create jobs in exchange for not collecting sales taxes for a certain period of time. But a spokesman for the company told the AJC there are no plans to build a warehouse or other operations in Georgia.
Georgia’s law, which expanded the definition of a physical presence in the state, was expected to add an additional $16 million annually to the state’s coffers. The bulk of that would have come from Amazon’s sales.
The company’s move to start collecting the tax comes as the Marketplace Fairness Act, a federal bill that would empower states and localities to collect sales taxes from Internet retailers that do not have a physical presence in their tax jurisdiction, remains stalled in the House. It passed the Senate in May, but there are currently no plans for a House vote.
Since 2008, Amazon has owned a subsidiary in the state, Fabric.com, which has operated independently from the Seattle company. But with the advent of tax collections, the Kennesaw subsidiary may integrate its operations more fully with its parent company. Amazon may also bring its Lockers program to Georgia. The lockers are secure drop-off points for Amazon packages. That operation would not bring any new jobs to Georgia.
In Florida, Amazon is opening a 3,000-job center that could bring $300 million in investment to the state, though there are no plans to collect sales tax there until the start of 2016, or when the facility is operational. In Tennessee, tax collection begins Jan. 1, and the company promised the state 3,500 full-time jobs and a $350 million capital investment.
Virginia shoppers will also paying sales tax at Amazon.com Sept. 1, and the state was promised 1,350 jobs at two fulfillment centers. In Texas, Amazon started collecting the tax last July, after promising projects creating at least 2,500 jobs over four years.
A spokesman for Gov. Nathan Deal said in an email that he had no comment on Amazon’s plans here.
In February, the spokesman, Brian Robinson, said the state was negotiating with Amazon to collect sales tax, and wanted to come to a “mutual agreement.” He said then that the state would “welcome any new jobs” Amazon might bring.
“We expect Georgia to be collecting this tax in a reasonable amount of time, ” Robinson said in February. “The state has the authority to collect the tax. We’re negotiating from this position.”
A 2009 University of Tennessee study estimated that, on the high end, Georgia would lose $455.5 million in uncollected Internet sales tax in 2012. Since that study was completed, online sales have grown at a faster pace than even his estimates predicted, Bill Fox, director of the Center for Business and Economic Research at the school, said in May.
Although the growth of online shopping is rapid, the number of online purchases is still relatively low, said Peter Bluestone, a senior research associate with Georgia State’s fiscal research center. Bluestone prepared a report that said the state should expect to bring in $16 million under the law. For that study, Bluestone looked at states like New York, which have been collecting taxes from online sales. He said New York brings in less than $100 million a year from the tax.
“Online shopping is still a relatively small percentage of sales,” he said. “Still, the majority of things are bought in brick-and-mortar stores.”
The owners of those stores will be thrilled to hear that Amazon will begin collecting taxes, McAllister said. If Amazon did not plan to start collecting the tax, McAllister said his organization would have considered filing suit to force it to collect.
Now, McAllister said, stores will no longer have to contend with “showrooming” — where shoppers walk in to a store to see and touch an item, then buy it, tax-free, online.
“It levels the playing field for Georgia companies,” he said. “That’s great.”
Several shoppers said Friday that they did not shop on Amazon to avoid taxes, but did so because items on the website cost less than in the store. Christina Pike, a Marietta resident, said people ultimately shop where items are least expensive. If Amazon’s prices are lower than in a store, she said, she will continue to buy from the website.
Albert Bell, who lives in Smyrna, said he shops the site for shoes and clothes. Free shipping and tax-free sales make a big difference, he said. But since he’s already paying tax when he buys items in a store, it won’t be a difficult adjustment.
“We’re talking, like, five dollars,” he said.
Still, Bell said, he’ll likely look for other places where he can buy tax-free.
“If you can find it without tax, why pay tax?” he asked.
AJC reporter Arielle Kass has been following the online sales tax issue for nearly a year. In today’s exclusive story, Kass reports that Amazon will start collecting the tax next month.