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Amazon CFO Predicts Internet Sales Taxes

Posted on: Thursday, 8 May 2003, 06:00 CDT

SEATTLE (AP) -- Amazon.com's chief financial officer said Thursday he believes collecting sales taxes for Internet purchases is "inevitable," although the company later said it doubts that could happen anytime soon.

At the Ragen MacKenzie investment conference in Seattle, Amazon CFO Tom Szkutak said collecting sales and use taxes on behalf of states, municipalities and other taxing jurisdictions is "inevitable and it's certainly something we support doing" - provided that the process is drastically simplified.

There are more than 7,500 taxing jurisdictions across the country, levying varying tax rates and employing different rules that make collecting sales tax an overwhelming administrative burden for Amazon and other Internet retailers, said company spokesman Bill Curry.

Because of that complexity, "remote" sellers such as Internet and catalog retailers are not required to collect sales taxes from customers in states where they don't have a physical presence.

Amazon collects sales taxes in Washington state where it is based and in North Dakota where it operates a call center.

Brick-and-mortar stores have long complained that the exemption gives Internet retailers an unfair advantage. And several states have been working together to simplify the taxing structure across jurisdictions. But so far, Amazon contends there has not been any real progress.

If Amazon were required to collect sales taxes, it's difficult to know what the impact might be, Szkutak said. Curry later noted that sales taxes have not seemed to be a deterrent in the states where it collects them.

"We are more than happy to collect sales taxes if that complexity is truly simplified," Curry said. "The efforts to date to simplify it are insufficient. ... We support true genuine sales tax simplification but we haven't seen anything approaching that yet."

Curry also downplayed the "inevitable" statement, noting that it could be "decades away" or "at the current pace, it will be never."

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