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Originally published October 26, 2012 at 5:38 PM | Page modified October 27, 2012 at 8:12 AM

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Amazon settles with Arizona over sales taxes

Seattle-based Amazon disclosed Friday that it has agreed to begin collecting Arizona’s sales tax in February.

Seattle Times business reporter

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Amazon.com said Friday it will begin collecting sales taxes in Arizona next February, ending a year-old dispute with the state over a $53 million tax bill.

Last November, Arizona came after Amazon for $53 million in taxes it said the company should have paid for a nearly five-year period.

Amazon disclosed in a regulatory filing that it made an “immaterial payment” in September to settle the dispute, while still repudiating the tax bill’s merits.

Arizona is set to become the ninth state where Amazon will collect sales taxes. Since July, Seattle-based Amazon also has begun charging for the tax in California, Pennsylvania and Texas.

Amazon said it will collect taxes on sales of physical goods in Arizona starting Feb. 1, followed by taxes on sales of digital products and services July 1.

A spokesman for Arizona’s revenue department declined to comment Friday, citing taxpayer-confidentiality rules.

At issue was whether Amazon — which has four distribution centers in Arizona — should have collected the state’s sales tax from March 2006 through December 2010.

Amazon long has avoided charging its customers sales taxes under a 1992 U.S. Supreme Court decision that excuses Internet retailers from tax liability in states where they lack a physical presence.

For years, Amazon circumvented new tax requirements even as it expanded its distribution system by setting up separate legal entities for its warehouses.

Over the past year, though, Amazon has backed away from that strategy amid mounting efforts by its bricks-and-mortar rivals to persuade Congress to pass federal “e-fairness” legislation.

Amazon will begin collecting sales taxes in New Jersey next July, followed by Virginia two months later. Indiana, Nevada and Tennessee also are to receive sales-tax collections from Amazon beginning in 2014.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

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