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Archive for Wednesday, February 4, 2004

Amazon.com to charge state sales tax

February 4, 2004

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— Online retailer Amazon.com will begin complying with changes in the state's sales tax law beginning April 1, company officials told legislators Tuesday.

Rich Prem, the company's head tax official, said Seattle-based Amazon.com had been working with Kansas to conform with the state's new destination-based sales tax law since July, when it took effect. Amazon.com operates an automated distribution center in Coffeyville, employing 375 people.

Prem said Amazon.com was joining retailers Toys R Us, Babies R Us and Target, which already remit sales tax from Internet and other offsite sales to the state.

Prem estimated that Amazon.com would collect between $1 million and $1.2 million a year in sales taxes from Kansans purchasing products distributed through the Coffeyville site. Kansans currently are required to pay a use tax to the state for purchases made out of state, over the Internet or from catalogs, if the retailer doesn't do so.

"Presumably, some customers are self-assessing and remitting that tax," Prem said, drawing chuckles from legislators.

The new sales tax law requires merchants to collect sales taxes at the rate imposed where they deliver their goods. For decades, merchants have collected the tax at the rate in effect where their businesses are located.

The state imposes a 5.3 percent sales tax, but cities and counties can add their own local taxes, which can raise the total rate paid by consumers to 7.8 percent. Because Kansas has 751 taxing jurisdictions, rates can vary within a county.

Kansas is part of a consortium of states moving toward streamlined sales tax collection, with a goal of collecting taxes on Internet and catalog sales. Prem said many states were looking to Kansas for guidance in implementing the changes, including Washington and Ohio.

"We're all for simplification," he said. "We are just asking for one rule for our programmers."

Revenue Secretary Joan Wagnon said the state continues to exercise relaxed enforcement of the new law. Wagnon said the agency had been developing software and other support materials to help businesses comply with the changes. A series of statewide workshops begin next week in Olathe.

Wagnon said while progress was being made to address concerns, businesses must be willing to make changes and work with the state.

"Our philosophy is to help them," she told legislators. "There's a point where I can't keep relaxing this forever."

However, legislators have introduced several bills in response to concerns from retailers, including one that would place a moratorium on complying with the changes until July 1. Other bills would provide tax credits for investments in new computers or cash registers necessary to compute the tax rates.

House Taxation Committee Chairman John Edmonds, R-Great Bend, said the committee was likely to begin reviewing many of the proposals later this month.

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