Branstad sees nexus in Amazon sales tax decision

DES MOINES - Gov. Terry Branstad says he believes there was more than coincidence, corporate goodwill or random selection behind Amazon's decision to begin collecting Iowa's sales tax on online purchases effective last Sunday.

'The only reason why they would pay sales tax in the state of Iowa - it's not out of the goodness of their heart, it's that they're going to have a nexus here,” the governor said in an interview this week. 'They are a growing company, so I could see a fulfillment center or a distribution center or a data center, like the others have done, in the future.”

The 'others” Branstad was referring to were Facebook, Microsoft and Google - highly sought-after companies that have put facilities in Iowa in recent years.

State Department of Revenue officials say Amazon officials contacted them with notification the Seattle-based giant online retailer would begin to collect Iowa's 6 percent sales tax on purchases beginning Jan. 1. Amazon will not collect the local-option portion of the sales tax at this time. It already collects sales tax for purchases made by residents of 29 states and the District of Columbia.

Iowa law requires companies with a 'nexus” in the state to collect sales tax for online purchases. That means retailers with a brick-and-mortar presence such as Barnes & Noble, Target and Wal-Mart must collect sales tax on their online orders. For retailers such as Amazon that do not have a physical presence here, the burden has been on the customer to send the state an equivalent use tax, though few do.

'They'll have a legal obligations (to collect sales tax) once they have a nexus, and they've done this in several other states,” Branstad said. 'We've called on them and I think they're really interested. They're not ready to announce it yet, but the fact that they have made this commitment to start paying sales tax now tells me it's something that's imminent.”

Amazon officials did not respond to a request for comment.

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Gazette correspondent George C. Ford contributed to this report.