Longmont, Boulder ink agreements with Amazon for city sales taxes

July 05, 2016

By Karen Antonacci Times Call

Some Colorado Amazon.com customers, including those in Longmont and Boulder, are paying a little bit extra on their purchases.

Amazon began approaching several Colorado cities earlier this year, inking sales tax remittance agreements with the municipalities in the spring.

The agreements state that local sales tax from purchases on Amazon; fashion sites Zappos.com,6PM.com and Shopbop.com; and household and beauty products from Quidsi Retail LLC should be remitted to the cities.

Longmont’s city sales tax rate is 3.275 percent while Boulder’s is 3.86 percent.

The agreements also include eligible purchases from Amazon Digital Services Inc., which sells the Kindle software and digital files, and Audible.com, a subscription-based audiobook download and streaming service.

Amazon representatives did not respond to requests for comment.

A survey of nearby cities found that Amazon has similar sales tax remittance agreements or a local sales tax licence in Denver, Arvada, Thorton, Westminster, Aurora and Centennial.

Longmont Finance Director Jim Golden said he couldn’t speak to why Amazon approached Longmont and other Colorado cities, but the agreement seemed to be in the city’s best interest.

“It should be a positive impact to us,” Golden said. “It’s hard to know what the impact will be going forward.”

City staff are prohibited from divulging the amount that Amazon remits under the Longmont Municipal Code.

Golden said there has long been conjecture on both the federal and state level that local governments are losing out on increasing sales tax revenue from online-only retailers.

That, plus the idea that brick-and-mortar stores are at a disadvantage because they do have to charge and remit sales tax, led Colorado lawmakers to pass a measure dubbed the Amazon Tax law in 2010.

Federal law says that a business without a presence in a state doesn’t have to collect or remit state sales tax.

The Amazon Tax law said that if an online retailer didn’t have a presence in Colorado and wasn’t paying state sales tax, they are required to track purchases by state residents.

Amazon would then have to report those transactions to the state and advise customers that the customers are required to pay taxes on their purchases, according to The Denver Post.

The Direct Marketing Association challenged the law, but the U.S. Court of Appeals for the 10th Circuit eventually ruled in Colorado’s favor, The Post reported.

Amazon started collecting state sales tax in February. The state sales tax rate is 2.9 percent plus another 1 percent for residents within the Regional Transportation District and another 0.1 percent for residents in the Scientific and Cultural Facilities District. Longmont and Boulder are within both of those special districts.

Sharon Lassar, professor and director of the University of Denver’s School of Accountancy and Daniels College of Business, said the fallout from the Amazon Tax law is likely why Amazon is approaching cities.

“My guess is Amazon looked at the law and realized, ‘We can either comply and cause our customers to become confused or angry and in some regards invade their privacy,’ which doesn’t make good business sense, or on the other hand they could just collect the sales tax up front, which would be a less complicated way to put it to customers,” Lassar said.

Amazon is also building a 452,000-square-foot warehouse in Aurora and hiring for it began in April, The Aurora Sentinel reported. Lassar said the warehouse, when finished, would definitely mean Amazon has a presence in the state and the “legal nexus” requirements may have already been tripped when the company requested building permits.