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Amazon to begin collecting sales tax in NC on Feb. 1

RALEIGH Amazon.com will begin collecting sales tax in North Carolina beginning Feb. 1, a company official confirmed Monday.

The move will make North Carolina the 20th state in which the online retailer collects sales tax, according to Amazon’s website. It’s unclear why Amazon decided to make the change now. A spokesman didn’t respond to questions about the timing of the move and whether the Seattle-based company would begin collecting sales tax in other states besides North Carolina on Feb. 1.

The company’s decision will be welcomed by retailers who have long complained that Amazon’s failure to pay the state’s 4.75 percent sales tax gives it an unfair advantage. Local taxes increase the rate to 6.75 percent to 7.5 percent, depending on the county.

For South Carolina, Amazon agreed to start collecting sales taxes in 2016.

For the most part, online retailers have not had to charge sales tax in states where they don’t have a store or some other physical operations.

Under the current system in North Carolina, taxpayers are supposed to pay a “use tax” on online purchases and declare them on their state tax returns. Few do. One 2010 estimate said failure to pay the taxes costs the state, its cities and counties $190 million a year.

The National Council of State Legislatures estimated that states lost $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases.

Efforts to collect sales taxes from Internet retailers have increased in recent years as online shopping has surged and states have become increasingly desperate for tax revenue.

In 2010, the N.C. Department of Revenue tried to get Amazon to turn over customer names so that the state could charge sales tax for their online purchases. But the ACLU, a nonprofit civil rights advocacy group, sued.

The ACLU didn’t take a stand on the attempt to tax online retailers. Rather, it argued that the request was illegal because it would have linked customers to items they purchased, revealing the names of books, DVDs and other products. A federal judge agreed, and in 2011 the state settled with the ACLU.

The U.S. Senate last year passed the Marketplace Fairness Act, which would require states to simplify their sales tax laws in exchange for being able to tax Internet companies with more than $1 million in sales annually. The bill has yet to pass the House.

Amazon’s decision “levels the playing field between the Internet retailer and the bricks-and-mortar stores,” said Jim Garriss of Burke Brothers Hardware in Raleigh.

Bracken: 919-829-4548
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