Arizona Sales Tax Fairness Bill Clears Senate Committee

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Study estimates the legislation could recapture more than 5,400 Arizona jobs

SB 1338, a bipartisan sales tax fairness bill introduced in late January, cleared Arizona’s Senate Commerce Committee on Wednesday, February 8, by a vote of 5-0-1.

SB 1338 clarifies that retail companies in Arizona that have a physical presence in the state, such as a warehouse and distribution center, cannot use complex corporate structures to avoid collecting and remitting state sales tax from customers. The bill is co-sponsored by Arizona state Senators Al Melvin (R-3) and John McComish (R-20) and Representatives Justin Olson (R-19) and J.D. Mesnard (R-21).

If SB 1338 is enacted, Arizona could recapture more than 5,400 total jobs and stop future job losses, according to an economic impact study prepared by Elliott D. Pollack & Company for the Arizona Retailers Association in partnership with the Arizona Alliance for Main Street Fairness. The more than 5,400 direct and indirect jobs lost due to the absence of online taxation equates to more than $155 million in wages and $463 million in economic output, the study estimated. If SB 1338 is not signed into law, Arizona stands to lose nearly 9,000 jobs by 2015.

The study also confirmed the online sales tax loophole’s devastating fiscal impact on the state coffers.  Beginning in 2010, there was an estimated $317 million in uncollected sales taxes, with that number expected to grow to $576 million by 2015.  

The American Booksellers Association is calling on its bookstore members in Arizona to contact their state lawmakers in support of SB 1338.

“We cannot continue to lose good, local jobs due to this inequity in the marketplace,” said Sen. Melvin in a statement.  “Small businesses and the jobs they provide are the engines of economic growth in Arizona.”  

“I support this legislation” said Rep. Olson, in press release. “It clarifies an existing requirement that already applies to any business that has a presence in Arizona.”

Last week, BTW reported that the state of Arizona is seeking some $53 million in unpaid transaction privilege (or sales) tax plus interest from Arizona issued the assessment in November. has four distribution centers in Arizona, but claims it does not have nexus in the state.