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Amazon to collect sales tax in Ohio

ASSOCIATED PRESS

Amazon to collect sales tax in Ohio

COLUMBUS — Giant Internet merchant Amazon will begin collecting sales taxes on Ohioans’ online purchases beginning Monday now that it has decided to build three cloud-computing and data-analytical centers near Columbus.

Neither the state nor Paul Misener, Amazon’s vice president of global public policy, would estimate what the value of those taxes would be.

Mr. Misener stressed that the agreement was voluntary on Amazon’s part. He supports efforts in Congress to establish a uniform tax collection system for online sales nationally. Such a federal law, he said, could mean $150 million to $300 million a year in taxes for Ohio from all online merchants.

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“If we’re going to get more revenue, we should cut people’s taxes with it,” Gov. John Kasich said Friday.

Cloud computing services are already subject to sales taxation in Ohio, so that portion of Amazon’s business would have been taxed.

Amazon’s selection of central Ohio for its data-processing investment of “hundreds of millions of dollars” has not been much of a secret. Mr. Kasich has been talking about it for months.

The state, however, confirmed on Friday that the centers will be built in Dublin, New Albany, and Hilliard near Columbus. The centers promise more than 1,000 high-paying jobs with good benefits.

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Amazon is also looking at Ohio for a potential shipping center for its online sales.

The announcement plays into Mr. Kasich’s depiction of an Ohio economy that is diversifying beyond its manufacturing and agricultural image and comes as he is traveling to early presidential primary states to hold Ohio up as an example of the direction the nation should go.

“Tax cuts matter, and the kind of taxes that you have in a state really matters as well,” the Republican governor said.

As part of the deal, the state has agreed to waive sales tax collection on the equipment that Amazon would frequently have to purchase and change to keep its data centers state of the art. The state also previously approved $81 million in tax incentives to an Amazon subsidiary as part of the project.

Goods purchased online that are shipped into Ohio are subject to state and local sales tax. But because of constitutional protections of interstate commerce, states have been barred by the courts from forcing collection by out-of-state entities such as Amazon that do not have a store, warehouse, or other physical nexus within the state.

Ohio relies on consumers to report such Internet and catalog purchases on their income-tax returns and pay the “use tax” then, but most purchases go unreported.

“If you’re buying an Amazon product, they’re going to start charging Ohio sales tax and collecting it right when you are checking out,” said Gary Gudmundson, spokesman for the state Department of Taxation. “... That’s the advantage of having a central collection point instead of relying on 5 million, 10 million Ohio shoppers, who may or may not be aware that they owe tax.”

Gordon Gough, president and CEO of the Ohio Council of Retail Merchants, applauded Amazon’s decision to begin collecting the tax.

“Obviously, we’ve been on a soapbox for years about the noncollection of sales taxes by online retailers,” he said. “It’s great that Amazon is making an investment in Ohio and will follow all of the rules for retailers going forward.”

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.

First Published May 30, 2015, 4:00 a.m.

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