INDIANAPOLIS — The nation’s largest mall owner has filed a lawsuit against the state of Indiana, asking a court to force the state to start collecting millions of dollars of online sales taxes from the online retail giant, Amazon.com.
Simon Property Group filed the lawsuit in Marion County late Thursday. The Indianapolis-based company argues the state’s failure to compel Amazon to collect taxes on sales made in Indiana “amount to an illegal and unconstitutional subsidy” that harms Hoosier taxpayers and bricks-and-mortar retailers.
The lawsuit ratchets up the battle between the Internet retail giant and the bricks-and-mortar stores that have to collect the state’s 7 percent sales tax. Amazon has been virtually exempt from having to collect the sales tax, after it cut a deal with Indiana five years ago to open distribution warehouses in the state.
The Simon lawsuit argues that since Amazon has a physical presence in the state, with three major distribution centers, it should have to collect the sales tax just like other merchants in the state do.
“Amazon.com is required by Indiana law to collect and remit sales and use taxes to the state for sales made over the Internet, but has consistently refused to do so even though it is required by current Indiana laws,” Simon officials said in a statement.
The 2007 legislative deal that gave Amazon a pass from having to collect sales tax has cost the state’s treasury between $200 million to $400 million in lost sales tax revenues every year, according to state Sen. Luke Kenley, the Republican head of the Senate appropriations committee.
Kenley has led a national effort to compel online retailers to collect and remit sales taxes owed to state and local governments, estimated to be losing about $23 billion a year. A 1992 U.S. Supreme Court ruling created a tax loophole for online retailers with no physical presence in a state.
Simon officials said they aren’t seeking monetary damages, but filed the complaint on behalf of their tenants, who argue they’re at competitive pricing disadvantage because they must collect Indiana sales tax.
The suit asks the court to mandate the Indiana Department of Revenue to issue an assessment on Amazon for unpaid gross retail taxes and use taxes and all applicable interests and penalties.
Simon is the largest U.S. mall landlord. The company owns 27 shopping centers in Indiana.
Amazon has fought efforts by an increasing number of states to force the Seattle-based company to collect sales taxes on its $35 billion annual sales. Amazon has argued it wants a uniform and nationwide framework to collect the tax. Federal legislation seeking to do so has failed in past years. Several bills, including one supported by Illinois Sen. Dick Durbin, are currently pending in Congress.
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