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Amazon to begin collecting sales tax in Connecticut this year

The Internet retailer also agrees to invest $50 million in the state during the next two years.

Declan McCullagh/CNET

Another state will soon be reaping revenue from Amazon as the Internet retail giant has agreed to begin collecting sales tax from consumers in Connecticut.

Amazon will begin collecting the state's 6.35 percent sales tax on items bought on the site from within the state in November, state officials announced today. Kevin Sullivan, Connecticut's commissioner of Revenue Services, told the Associated Press that Amazon's tax collection will add $8 million to state coffers the first year, with $13 million to $15 million in the second year.

Amazon has also agreed to invest $50 million in Connecticut during the next two years, part of an initiative that will create hundreds of jobs in the state, Connecticut Gov. Dannel Malloy announced today.

"All in all, this is a win for our state's taxpayers, our main street retailers, and our workforce," Malloy said in a statement. "Amazon's multimillion-dollar investment and the hundreds of jobs that will come with both the construction and operation of their future facility will unquestionably boost our local economy. Their agreement to begin collecting revenue is a great step, but federal action on this issue is still necessary."

A fierce opponent of collecting sales tax from its customers, Amazon shut down its affiliate program in Connecticut in June 2011 over state legislation that directed the Web giant to collect sales tax even though federal law does not require it to do so. It has made similar moves in Illinois, Colorado, North Carolina, and Rhode Island in recent years over similar legislation.

Amazon said it was "delighted" to be working with Malloy to pass legislation at the federal level that it said "would finally resolve the sales tax issue, level the playing field for all retailers, protect states' rights and allow states to collect the revenue owed." Amazon CEO Jeff Bezos has been a longtime proponent of the Streamlined Sales Tax Initiative, which he says would simplify the collection of sales taxes among states.

The retailer currently collects taxes in eight states, including California and Texas. Amazon customers in New Jersey and Virginia will begin paying sales tax this year, with similar plans set up for Tennessee, Indiana, Nevada, and South Carolina in the coming years.