Amazon.com is in negotiations with the state about starting to charge sales tax to Georgia shoppers, three people familiar with the talks said.
The question is when.
Since Jan. 1, the world’s largest online retailer has not collected the tax, despite a new state law requiring online retailers to charge it at the start of the year.
In other states with similar laws, Amazon has made deals to delay collecting sales tax for months or longer, often in exchange for bringing jobs to a state. Just this week, the Seattle-based company agreed to start collecting sales tax in Connecticut Nov. 1 — and to invest $50 million to build a future facility and bring hundreds of jobs there over two years.
Rick McAllister, the president and CEO of the Georgia Retail Association, said he expects a similar outcome here.
“I’m very comfortable saying Amazon will build a distribution center in Georgia,” McAllister said.
Details of the Georgia negotiations are being kept under wraps, said the three people aware of the conversations. They said it may be weeks before any compromise is announced.
By negotiating deals to collect taxes at a later date, Amazon could avoid costly litigation and buy itself more time as a tax-free site, which brick-and-mortar stores claim gives it a competitive advantage.
“There’s recognition on Amazon’s part that the tide will eventually turn against them legally,” said David Brunori, a professor of public policy at George Washington University. “They want to buy time before that happens.”
Building warehouses or distribution centers expand the company’s network, enabling quicker delivery.
Online stores already are required to collect sales tax in Georgia if they have a physical presence in the state. The new law expands the definition of physical presence. For example, Amazon would have to charge sales tax because it gets some customer traffic from other sites that have physical operations in Georgia.
Georgia shoppers who do not pay sales tax online, meanwhile, already are supposed to self-report the amount they owe and pay it. But very few do.
This winter, state legislators have proposed a bill that some hope would embarrass Amazon and other retailers that may owe the tax into charging it to Georgia shoppers by creating a list of retailers that are paying under the new law.
Publishing the list could spur people to shop on websites that are following the law, they reason, and would allow lawmakers to see where any money is coming from. Its prospects remain uncertain. And no other changes to the 2012 law appear to be in the works.
The state expected the new law to generate $16 million a year, but so far it’s unclear if any retailers that were not collecting tax have started to do so. Some, such as Overstock.com, canceled relationships with Georgia website owners to avoid charging the tax.
Many states have made deals with Amazon similar to Connecticut’s, including Tennessee, Virginia and Texas.
In Tennessee, tax collection begins Jan. 1, 2014, and in the meantime Amazon is emailing shoppers there to tell them they are obligated to pay the use tax on their own. The company promised the state 3,500 full-time jobs and a $350 million capital investment. Virginia shoppers start paying sales tax at Amazon.com Sept. 1, and the state was promised 1,350 jobs at two fulfillment centers.
In Texas, Amazon started collecting the tax July 1, after promising projects creating at least 2,500 jobs over four years.
In South Carolina, an earlier deal — to build a distribution center with 1,250 jobs and exempt shoppers from paying sales tax at Amazon.com for five years — fell apart in 2011. But the company now has a deal with the state that will keep it from collecting sales tax until 2016, as long as it creates 2,000 jobs by the end of this year. Shoppers there also get email notices that they are required to pay the tax themselves.
Other states — including Florida and Indiana — are considering legislation to collect sales tax from the company. And a national law has been in the works.
Richard Pomp, a professor at the University of Connecticut School of Law, said Amazon likely is not collecting tax in Georgia because it thinks it has room to challenge the law, which he said was poorly drafted.
But House Minority Leader Stacey Abrams (D-Atlanta) said Amazon appears to be acting above the law.
“I don’t think there’s wiggle room,” she said. “I think the law as passed is very clear.”
Abrams said despite what has happened in other states, she is “strongly opposed” to any agreement that delays tax collection for Amazon. She said that would mean trusting a jobs commitment from a company that has not been trustworthy.
Jud Seymour, a spokesman for the state department of revenue, said he could not comment on the proposal or on any possible discussions the department may be having with Amazon. No one from Amazon returned several phone calls seeking comment and representatives of the governor’s office would not speak about the conversations.