Amazon Repays Indiana Sales Tax Policy

1:31 PM, May 9, 2011   |    comments
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Indianapolis, IN (IndyStar.com) - Amazon.com is planning to open a third large distribution center with hundreds of jobs in tax-friendly Indiana, finding refuge from other states that have attempted to force the online retail giant to collect sales tax.

The news was reported in the Indianapolis Star.

Seattle-based Amazon announced Monday that it plans to open a 900,000-square-foot Internet order fulfillment center in Indianapolis this summer but gave few other details. It declined to disclose the facility's precise location.

Company officials said the facility will create hundreds of jobs. That figure could go higher, considering that an existing Amazon fulfillment center in Whitestown has 1,200 full-time workers. Another in Plainfield opened with 350.

Like the existing centers, the new Indianapolis facility is expected to hire hundreds of additional seasonal workers, particularly around the busy Christmas season.

The new distribution center appears to recognize Indiana as a distribution hub and for maintaining an environment that does not force the online retailer to collect state sales tax as other states have pressured it to do.

The company did not specifically address the sales tax issue in its written statement, but it did acknowledge Indiana's support.

"We are committed to growth in Indiana because Gov. Mitch Daniels and other state officials have demonstrated their commitment to Amazon jobs and investment," said Paul Misener, vice president of Amazon Global Public Policy.

Typically, companies are required to collect state sales tax in every state in which they have a physical presence -- though what constitutes a "physical presence" can be difficult to define.

Large brick-and-mortar companies such as Wal-Mart and JCPenney have to collect sales tax in every state.

Online-only retailers, which ship goods to shoppers from large warehouses, don't have such a saturating physical presence and often avoid collecting sales tax in some states.

Traditional retail stores say that gives online-only operations an unfair advantage. David Simon, president of Indianapolis-based mall owner Simon Property Group, is among the leading advocates for an online sales tax that puts online sellers on a level playing field with the malls and other stores.

For now, Amazon generally has amnesty from collecting sales tax in Indiana and other states where its warehouses are located.

Ironically, though, Indiana is among more than two dozen states pressing Congress to enact a uniform taxing system for Internet sales so the states can cash in on about $200 billion in Internet sales a year.

The goal is to take a patchwork of differing state tax rates and laws and create a uniform system that is easier for all retailers to navigate.

Amazon has been locked in a nationwide battle for at least three years over the sales tax issue.

In April, the company decided to close an existing fulfillment center in Texas after the state sent it a bill for hundreds of millions of dollars in unpaid sales taxes.

The company also canceled plans for a center in South Carolina when the sales tax issue heated up.

Amazon has said it is "not opposed to collecting sales tax within a constitutionally permissible system applied even-handedly," according to the Washington Post.

As for the precise location of the new Indianapolis center, Amazon isn't saying.

But if the retailer sticks to Marion County, commercial real estate brokers say the most likely site is 710 South Girls School Road, a 1.4 million-square-foot distribution center built in 1997 for former manufacturer Thomson Consumer Electronics. Since Thursday, Amazon.com has been advertising a few management and supervisory job openings for an Indianapolis fulfillment center. The online and newspaper employment ads do not give a specific location for the plant. Pay for warehouse jobs is listed in the $12-per-hour range.

"We look forward to opening our third facility in Indiana this summer, bringing additional dollars and jobs to the state," Dave Clark, vice president of Amazon's North American Operations, said in a written statement.

 

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