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Group will seek online sales tax collections

Mass. merchants cite Amazon’s advantage

Prompted by Amazon.com’s reported plans to set up offices in Massachusetts, a new coalition of more than 80 retailers, organizations, and individuals has been formed to advocate for the state - and the nation - to collect taxes from online sales.

Scheduled to be unveiled Monday at the Harvard Book Store in Cambridge, the Massachusetts Main Street Fairness Coalition was formed under the umbrella of the trade group Retailers Association of Massachusetts.

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The coalition is being cochaired by Salem Mayor Kimberley Driscoll and David Didriksen, owner of Willow Books and Cafe in Acton, with the goal to protect both local merchants and urban shopping districts.

“My interest is creating and maintaining a vibrant downtown,’’ Driscoll said. “That’s difficult if local merchants start out with a price disadvantage against online retailers like Amazon.’’

Massachusetts law requires residents to pay any taxes on their online purchases that the seller does not automatically charge. However, people usually do not report their online shopping, and it is nearly impossible for the state to track those transactions, said Jon Hurst, president of the state Retailers Association.

On the other hand, brick-and-mortar retailers must charge the state sales tax on each transaction - 6.25 percent of the purchase price.

“Right now, Amazon has an automatic 6.25 percent competitive advantage over me,’’ Didriksen said. “It’s totally unfair. If the state is going to make me collect the tax, they ought to make Amazon collect it, as well.’’

Taxing online sales has been a national issue since the rise of Internet retailing in the 1990s. In 1992, the US Supreme Court ruled that vendors without a physical presence in a state are not required to collect that state’s sales tax. The ruling also specified that Congress could change that.

Amazon, which declined to comment for this story, has not confirmed it is opening a Massachusetts office, although it is preparing a space in the Cambridge Innovation Center in Kendall Square. In March, the company bought a North Reading robotics firm, Kiva Systems Inc., for $775 million, establishing its first presence in the state.

Amazon collects sales taxes in five states where it has warehouses or offices: Kansas, Kentucky, New York, North Dakota, and Washington. The company has also negotiated deals to collect sales taxes at specified future dates in California, Pennsylvania, Indiana, Tennessee, South Carolina, and Virginia.

The coalition is hoping Amazon’s presence in Massachusetts will open the door to a similar agreement here.

Massachusetts requires that an online retailer collect sales tax only if it has retail stores in the state. For example, Staples.com - website for the office products seller, which is headquartered in Framingham - adds sales taxes to purchases made by Massachusetts residents, because it has stores here. The new coalition plans to lobby the Legislature to require Internet sellers with nonretail operations in Massachusetts, such as distribution centers and research facilities, to collect taxes on online sales in the state.

“Amazon is now a Massachusetts employer. Let’s make sure they play by the same rules as about 40,000 retail outlets across the state,’’ Hurst said.

Although the ultimate solution will probably be national legislation, Hurst said, he believes the group can advance the agenda by advocating for change at the local level.

“Everybody has a Main Street in their districts,’’ he said. “Let’s get rid of the incentive to shop outside Massachusetts.’’

D.C. Denison can be reached at denison@globe.com.
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