By Erin Mansfield, VTDigger.org
Amazon.com will start collecting sales tax from customers in Vermont, a decision that political and business leaders say they have been working for years to achieve. The online retail giant said it would start collecting the taxes Feb. 1 — five months before a new Vermont law would have required the company to start notifying customers every year that they should be paying sales tax.
Erin Sigrist, the president of the Vermont Retail and Grocers Association, called Amazon.com’s announcement “a welcome message for us.” “We represent a significant portion of small businesses across the state, and many online retailers that don’t charge (customers) sales tax are basically reaping an unfair advantage over Vermont-based businesses,” Sigrist said. Despite selling to customers in Vermont for several years, Amazon.com has not been collecting the state’s 6 percent sales tax, according to Rep. Janet Ancel, D-Calais, the chair of the tax-writing House Ways and Means Committee. Small businesses routinely collect sales tax from Vermont customers because they have bricks-and-mortar operations here, Ancel said, but Amazon.com has not been forced to comply because it does not have a physical presence in the state. The Legislature passed language in its 2016 tax legislation requiring “noncollectors” such as Amazon.com to send annual letters to customers notifying them how much they need to pay the state in sales taxes. That law goes into effect for noncollectors July 1. “The challenge with the state has been what to do as more and more people buy stuff online,” Ancel said. “How do they keep the sales tax revenue growing at the usual slow rate that it grows? How do they keep it from eroding?”
The Department of Taxes does not disclose how much individual businesses pay in taxes. But economists for the state project that, under the new notification law, sales tax collection will increase from $370.7 million in fiscal year 2016 to $382.1 million in 2017 and $396.6 million in 2018. Senate President Pro Tem Tim Ashe, D/P-Chittenden, said he and a colleague introduced a bill six years ago seeking to make online retailers such as Amazon.com collect sales tax from customers and send it to the state. “It was a basic matter of fairness for us,” Ashe said in a statement. “In the six years since, large online retailers have been unwilling to play on the same level field with local brick-and-mortar stores, contributing to the closure of some of them.” He said Amazon.com’s announcement “at last allows Vermont retailers to compete on fairer terms with the online retail giant. I hope many more online retailers will join Amazon in the coming months.”