Taxes play role as Arizona nets 4th Amazon facility

Amazon Inc. announced Thursday that it plans to open a fourth Arizona distribution center, giving the state a nod for its hands-off stance on the issue of pressing online retailers to collect sales tax on shoppers' purchases.

PHOENIX — Amazon Inc. announced Thursday that it plans to open a fourth Arizona distribution center, giving the state a nod for its hands-off stance on the issue of pressing online retailers to collect sales tax on shoppers' purchases.

State and local governments can adopt policies to attract and retain businesses, "and we have a history of partnering and growing in the states that welcome us," said Paul Misener, Amazon vice president for global public policy.

Seattle-based Amazon's new 1.2-million-square-foot facility, planned to open in an existing building this fall, will join three existing distribution centers on the west side of the Phoenix metro area.

Amazon declined to provide specific figures but said the new facility will add hundreds of jobs, giving the company an Arizona workforce of more than 3,000.

As some states facing budget squeezes press for online retailers to collect sales taxes, Amazon is steering business toward states that are not.

Amazon announced Wednesday that it would open a fourth Indiana distribution center just outside of Indianapolis. Indiana officials four years ago offered to not push the tax issue in recruiting Amazon to the state.

On the other hand, the Texas comptroller in February demanded that Amazon pay $269 million in back sales taxes because a subsidiary operated a warehouse near Dallas. Amazon is appealing the order. And California recently approved a new law forcing online retailers to collect sales tax there, estimating it would net $200 million annually. Amazon reacted by cutting ties with its advertising affiliates in that state.

Under a U.S. Supreme Court ruling, companies generally don't have to collect tax on sales that go to states where the companies don't have a physical presence, such as an office or a factory.

Amazon contends it doesn't have to collect sales tax on Arizona sales because a subsidiary operates its facilities in the state.

Republican Gov. Jan Brewer hailed the company's decision to locate the new facility in Arizona, saying it reflects the state's push to establish itself "as one of the most desirable places ... to do business."

She and Arizona Commerce Authority President Don Cardon said the state's stance on the tax collection issue helps make it attractive for business expansions and relocations.

"It's one of the things that's consistent with us being a deregulated state that's really attracting business," Cardon said.

Brewer said it's up to the federal government to come up with a national solution to the tax issue.

Misener confirmed that Arizona's stance on the tax issue was a major factor in the company's decision to keep expanding in the state.

"It has to do with abiding by constitutional restrictions," he said. "Some states choose to avoid raising these constitutional problems and other states have made other choices."

Amazon's appreciation to Arizona for not pressing the company to collect sales tax comes as the state starts prodding Arizonans to pay it themselves.

Arizonans are obligated under law to pay use tax - a version of the sales tax - on items they purchase for nonbusiness use, and they are supposed to report and pay that amount to the state if the seller doesn't.

State officials say individuals typically don't do that, but a new state law approved by legislators and Brewer in April will require taxpayers to report unpaid tax obligations as part of their state income tax returns.

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