September 28, 2013

Amazon curtails program in Maine

Blaming a state law to boost tax collection from online sales, the company severs ties with Maine 'associates.'

By Steve Mistler smistler@pressherald.com
State House Bureau

(Continued from page 1)

click image to enlarge

In this 2008 file photo, an Amazon.com employee grabs boxes off the conveyor belt to load in a truck at their Fernley, Nev. warehouse. Amazon, the online retailing giant, is fighting Maine's new law to collect taxes from Internet sales by ending its relationship with digital entrepreneurs in the state.

AP Photo / Scott Sady

In response, states including Maine have tried to broaden the legal definition of what constitutes a company's physical presence.

Maine's new law is modeled after laws in other states. Missouri, Colorado and Illinois have similar laws, which have prompted Amazon to eliminate its associates program there.

Amazon's decision appears designed to limit its exposure to the portion of Maine's law that broadens the definition of a company's physical presence in the state.

Mike Allen, LePage's chief of tax policy, said the new law is designed to recapture some of the lost revenue from online sales, but the state expects to get only a small portion.

"We're never going to get the whole piece of lost revenues," he said.

The issue has dogged other states, which are seeking the taxes to bolster cash-strapped budgets.

The National Governors Association has estimated that states fail to collect $23 billion a year in Internet transactions.

The group noted recently that the "explosive growth of electronic commerce" -- more than 10 percent annually -- means states' sales tax bases are eroding.

Maine's law is designed to align with passage of the federal Marketplace Fairness Act, which would allow states to collect sales taxes from out-of-state retailers. The bill passed in the U.S. Senate, 69-27, with Republican Sen. Susan Collins and independent Sen. Angus King supporting it.

The U.S. House has not taken up the bill. Republican House Speaker John Boehner has said the law would be a "mess" because it would require businesses to collect taxes in states with various tax rates.

In its notice to associates, Amazon said it will resume the program in Maine if Congress enacts the Marketplace Fairness Act.

It told associates that they will receive commissions earned before Oct. 7.

 

Staff Writer Edward D. Murphy contributed to this report.

 

Steve Mistler can be contacted at 791-6345 or at:

smistler@pressherald.com

 

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