Online retail giant Amazon will begin collecting sales tax on purchases made by Massachusetts customers next fall, the Patrick administration announced Tuesday.
In the announcement, Amazon also said it plans to create hundreds of high-tech jobs in Massachusetts over the coming years.
"I value the contributions large and small employers alike make to Massachusetts' economic vitality, and this agreement captures that," Gov. Deval Patrick said in a statement. "This agreement is a win for all sides, and I am pleased it promises to generate millions in long-term revenue for the Commonwealth.”
The administration had for months been negotiating with Amazon about collecting and remitting the state's 6.25 percent sales tax. As The Associated Press reported last month:
Under current rules, an online retailer is only required to charge a sales tax if it has a physical presence — such as a store or warehouse — in the consumer’s state.
Amazon has opened an office in Cambridge and, earlier this year, purchased the North Reading robotics firm Kiva Systems.
A study by the Massachusetts Main Street Fairness Coalition, cited in the past by Patrick administration officials, found that with a uniform online sales tax, Massachusetts could have collected $387 million in additional revenue last year.
Following Tuesday's announcement, Secretary of Administration and Finance Jay Gonzalez said he expects the deal will increase state revenue in the low tens of millions in fiscal 2014.
The Massachusetts agreement will go into effect Nov. 1, 2013 — "in time for the next holiday season," as the administration's announcement notes.
"Our businesses are grateful and relieved to know that they will not have to face another holiday sales season with a 6.25 percent tax disparity with the world’s largest online seller,” Jon Hurst, president of the Retailers Association of Massachusetts, said in a statement. “Although we would have preferred a level playing field this holiday season, we are grateful to Governor Patrick for his tireless work on this issue."
On Tuesday, both the governor and Amazon also said "they will work together toward enactment of federal legislation to resolve the sales tax issue by creating an equitable and simple framework for collecting sales taxes," according to their announcement. The legislation would require remote online retailers to collect and remit state sales taxes.
As State House News Service reports, a number of states, including New Jersey, have reached similar agreements with Amazon.
This article was originally published on December 11, 2012.
This program aired on December 11, 2012. The audio for this program is not available.