In the news

Neil Downing

Online sellers with no physical presence in Massachusetts cost the state 1,971 jobs, $279 million in sales to local businesses, and $387 million in state tax revenue in 2011, according to a study unveiled November 13 by the Massachusetts Main Street Fairness Coalition.

In a statement, Salem Mayor Kimberley Driscoll, coalition co-chair, said the findings illustrate "the adverse impact this loophole continues to have on our state's economy and underscores the need for action to level the playing field for our businesses." (For the report, see Doc 2012-23312 .)

The study focused on $6 billion in online purchases made by Massachusetts consumers in 2011. The coalition of retailers, labor unions, elected officials, and others wants the state to force online retailer to start collecting and remitting the state's 6.25 percent sales tax. The state has been in talks with Amazon. (For coverage, see State Tax Notes, Oct. 8, 2012, p. 95, Doc 2012-20353 , or 2012 STT 190-20 .)

Deirdre Cummings, legislative director for the Massachusetts Public Interest Research Group, told Tax Analysts on November 13 that the rationale for such favorable tax treatment no longer applies.

"The Internet tax subsidy was originally adopted in part to help grow an industry in its infancy," Cummings said. "Whether you agreed with it or not at the time, we can all agree the infant is now grown up. The tax break now just favors one industry over another, creating an uneven playing field among Internet companies and local brick-and-mortar businesses."

Alex Zaroulis, spokeswoman for the state's Executive Office for Administration and Finance, told Tax Analysts that the state is trying to address the coalition's concerns while encouraging Amazon to bring jobs to the state.

"A congressional solution is best for everyone -- and supported by all parties," Zaroulis said. "In the absence of such a solution, we have had productive conversations with Amazon officials about a solution that works for everyone, and we hope to close out those talks soon."

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