Gov. Sandoval reaches sales tax deal with Amazon

CARSON CITY - Gov. Brian Sandoval and Internet sales giant Amazon announced an agreement Monday to allow the state to start collecting sales taxes on the company's Internet sales to Nevada customers beginning in 2014.

In addition, Sandoval and Paul Misener, Amazon's vice president of global public policy, said they will work together to induce Congress to pass a law allowing the states to collect sales taxes on all Internet purchases.

"The only way to completely resolve this issue is for Congress to enact legislation that, within a simplified nationwide framework, grants states the right to require collection by all sellers," Sandoval said in a statement. "We thank Amazon for creating jobs and investment in Nevada and are very grateful the company is working with us on a federal solution."

The administration estimates the tax would bring in at least $16 million a year, although Taxation Director William Chisel said he could not guess on the amount of sales taxes that the state would collect on purchases by Amazon customers from Nevada.

In winning the election in 2010, Sandoval campaigned on a no-new-taxes platform. But in 2011 he supported extending for two more years $620 million in business and sales taxes, and earlier this month said he favored continuing those taxes into July 1, 2015.

But Sandoval's chief of staff, Heidi Gansert, said the Amazon sales tax was not a new tax.

"If you go into a store like Barnes & Noble or Walmart and buy something, you pay taxes," she said. "If you buy a book from Amazon, the tax still is due from the individual, but it is just not remitted."

Assemblyman Pat Hickey, R-Reno, said he did not consider it a new tax but "one that should have been collected anyway."

He said the agreement is an acknowledgement by Amazon that it could not win a court case if Nevada sued it for due taxes. New Mexico last week won more than $500,000 in past taxes from Barnes & Noble.

The states lose about $23 billion a year in sales taxes on untaxed Internet purchases.

Chisel said Congress is considering three bills that call for Internet sales tax levies. But eBay and many politicians, including Republican presidential candidate Mitt Romney, oppose Internet taxation. Sandoval recently endorsed Romney.

Amazon has a distribution center in Fernley and a subsidiary, Zappos, in Las Vegas.

Chisel said that under existing laws, companies that have a "nexus," such as a store in the state, are supposed to collect sales taxes on Internet sales to Nevadans. Under the agreement with Amazon, the company will remit sales taxes on Nevada customer purchases on Jan. 1, 2014, or earlier if Congress passes an Internet taxation law.

Nevada charges a 6.85 percent sales tax rate, which is almost equally divided among the state, public schools and local governments. Local governments also have tacked on their own sales taxes. In Clark County, the sales tax rate is
8.1 percent.

Misener said Amazon strongly supports federal legislation that would permit interstate sales tax collection "because it is the only way to level the playing field for all sellers, the only way for Nevada to obtain all the sales tax revenue that is already owed, and the only way to protect states' rights."

Nevada voters in 2008 and 2010 overwhelmingly rejected ballot questions that would have made it easier for the Legislature to implement Internet sales taxes quickly if Congress ever permits states to collect such taxes.

At the time of the 2010 election, studies showed Nevada was losing $114 million a year in Internet sales taxes and that total would increase to $200 million by 2012.

State Sen. James Settelmeyer, R-Minden, who proposed the 2010 ballot question, said it was not fair for local businesses to have to pay sales taxes when Internet companies did not.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.