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March 15, 2013

Online sales tax bill may not receive Senate hearing

Measure conflicts with previous agreement with Amazon.

INDIANAPOLIS — Legislation that would speed up the date for when Amazon and other online retailers would have to start collecting the state sales tax may be dead.

The bill overwhelming passed the House, but is now facing resistance from Indiana Gov. Mike Pence and Senate leaders, including the state senator who originally agreed to carry the legislation in the Senate.

“It just doesn’t seem to have a lot of legs right now,” said Sen. Ryan Mishler, a Republican from Bremen and the original Senate sponsor of House Bill 1007.

Mishler said the bill will likely die, without a hearing in the Senate.

The legislation would have required online retailers, including Amazon, to start collecting the state’s 7 percent sales tax on July 1.

But it would also negate an agreement made between Amazon and former Gov. Mitch Daniels, in which Amazon agreed to start charging its customers the sales tax on Jan. 1, 2014.

Mishler said he still supports the idea of making online retailers collect the sales tax, calling it a “fairness issue” for bricks-and-mortar retailers required by law to charge their customers a sales tax that online retailers have escaped.

But he said the legislation could also undermine the state’s credibility with other businesses seeking to move to Indiana.

“It makes it look like Indiana is willing to go back on deal,” Mishler said.

Pence views it the same way. During a press briefing with Statehouse print reporters earlier this week, Pence said he views the deal that Daniels made with Amazon as “constructive and productive” – and one that he’d be loathe to break.

The state requires retailers with a physical presence in Indiana to collect and remit the state’s sales tax. But in 2007, the legislature, at Daniels’ urging, passed a law that let Amazon opt out the sales tax in return for building five giant warehouse-and-distribution centers in the state.

Last year, after the Indianapolis-based  shopping mall giant, Simon Property Group, sued the state over the deal, Amazon agreed to start collecting the sales tax in 2014.

The difference between the Amazon-agreed date and House Bill 1007 is only six months, but it means millions of dollars in lost sales tax revenues for the state. And supporters of the bill say it would force Amazon and online retailers to start charging the sales tax during the two of busiest shopping seasons – the late summer back-to-school and the  Christmas holidays.  

Last month, the House voted 79-18 in favor of the bill after similar concerns to Mishler’s were raised by Rep. David Wolkins, a Republican from Winona Lake.

“If I were the CEO of a company looking at Indiana, I’d say ‘Why should I believe you?’” Wolkins said.

State Rep. Matt Pierce, a Bloomington Democrat who supported the bill, said he didn’t believe Daniels had the authority to cut the original deal with Amazon.

The online sales tax issue has grown in importance in recent years, as more consumers are shifting to online purchases and as the state relies more on sales tax revenues to pay for education and other public services.

A study completed last year by the Indiana Fiscal Policy Institute and Ball State University researchers estimates the state loses out $114 million a year in uncollected sales taxes on Internet purchases.

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com.

 

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