New Mexicans can no longer look to Amazon.com for a tax-free shopping experience.
The online retail giant will begin collecting gross receipts tax on New Mexico purchases in April, according to a spokesman for the New Mexico Taxation & Revenue Department.
The move will likely bring in “tens of millions” of dollars in revenue to the state, spokesman Ben Cloutier said in a written statement.
The gross receipts tax rate varies around the state. Albuquerque’s gross receipts tax is 7.3125 percent.
It is unclear what prompted Amazon’s change in New Mexico. A spokesman for Gov. Susana Martinez referred questions about the new policy to Cloutier, who said he could not comment on whether the state and company forged some kind of agreement. Amazon has not responded to Journal requests for comment.
Seattle-based Amazon has for years avoided collecting taxes in states like New Mexico where it does not maintain a physical business presence, something many have argued gives it an unfair advantage over traditional retailers.
Even such chains as Target and Best Buy have had to tax online purchases because they operate stores within the state.
But Amazon has recently been striking deals with states around the country to collect sales taxes. Similar announcements have recently come in Utah, Mississippi and Wyoming. A list at Amazon.com shows that it now collects taxes in 41 states and the District of Columbia.
Cloutier said in some states, most notably Colorado, Amazon started collecting taxes before announcing a major project. In January, the company announced it would open a “fulfillment center” in the Denver area.
Cloutier said New Mexico hopes for the same turn of events.
“That’s what we’re most excited about,” he said. “The potential is there for more growth and not just the immediate revenue impact.”
David Green, manager at Sport Systems, said the change could make a difference to local retailers.
Green said most customers at the Albuquerque sporting goods store comparison shop online – sometimes even using their smartphones while looking around the store.
The local store works to offset potential price differences by including services or other perks, like a free lift ticket to a local ski area with a purchase.
While Green said Sport Systems’ competition comes from other online merchants in addition to Amazon, he said Amazon’s new tax policy should make a difference at the store. It is especially beneficial on the sale of the newest products that no retailer, online or otherwise, is allowed to discount, he said. In those cases, the online merchant’s only advantage is not having to collect a sales tax.
Since Sport Systems deals in big-ticket merchandise like bicycles, a sales tax “can add up quickly,” Green said.
Several bills pending in the Legislature call for out-of-state online retailers, including Amazon, to begin collecting gross receipts tax from New Mexico consumers.
The provision is included in a proposed overhaul of the state’s tax codes on goods and services, sponsored by Rep. Jason Harper, R-Rio Rancho, as well as in a Democrat-backed tax package that passed the House last month. That measure, House Bill 202, is sponsored by Rep. Carl Trujillo, D-Santa Fe.
Some opponents of Bill 202 argue that it would prompt other states to enact similar laws, which could disproportionately hurt New Mexico’s smallest online merchants and open them up to possible audits by other states. Enacting such taxes could also send more online business overseas, said Phil Bond, executive director of the business coalition WE R HERE.
Journal Capitol Bureau Chief Dan Boyd and Assistant Business Editor Ellen Marks contributed to this story.