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Editorial: Utahns buy a mystery from Amazon

First Published      Last Updated Jan 19 2017 05:15 pm

The Utah State Tax Commission announced a deal last month to get Amazon to collect taxes on sales to Utahns, but what does it really mean to Utah's bottom line?

Not even the tax commission can tell you.

So what exactly did the state sign off on to get Amazon to do it?

That the tax commission knows, but it's still not going to tell you.

On the surface, it's hard to believe the agreement would be a loser for Utah. Amazon is said to generate about one-fifth of the taxable sales taking place on the internet. By getting them to collect and remit taxes on their share of those sales, state revenues appear certain to grow.



But how much will they grow? The people at the tax commission want to see what flows in over the next few months before making any predictions.

Gov. Gary Herbert and others have tossed around the figure of $200 million as the annual amount of uncollected sales tax from internet purchases, but that's an old and not necessarily reliable number. Yes, online sales are climbing, but so is the percentage of sales to companies like Target and WalMart that also have brick-and-mortar stores in Utah and therefore already must collect sales tax.

And there is some question as to whether Amazon will become a brick-and-mortar player here, too. The company recently opened a test store in Seattle with no cashiers or checkout lines, just a scanner that detects what customers leave with and bills them accordingly. If Utah were to get one of those Amazon stores, then the company would be required to collect sales tax on all of its sales anyway, including internet sales.

So that elevates the question of what the state gave up in the deal. The tax commission this week denied a records request from the Libertas Institute to release the terms of the agreement, saying it would give an undue advantage to Amazon's competitors.

All the tax commission will say is that Amazon is getting the same deal any other retailer gets. Retailers get to keep 1.31 percent of the roughly 7 percent they collect as compensation for collecting the taxes. That may bring some satisfaction that Amazon isn't getting a bigger cut than local businesses, but it still leaves open the question of what the state gave them instead.

It may not have been much. Amazon already collects sales tax in more than 30 states. On Jan. 1, Nebraska and Iowa joined Utah in that group, and it doesn't sound like it was a hard deal to make.

"Honestly, Amazon contacted us and agreed to do this," said Victoria Daniels, spokeswoman for the Iowa Department of Revenue, told the Cedar Rapids Gazette in December.

So what could be in the Utah agreement that would cost Amazon a competitive advantage? Is it Amazon's secrets that we're hiding, or Utah's?

 

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