Mississippi Justice Institute Director Mike Hurst filed a complaint with the Mississippi Ethics Commission on Friday after his public records request for the Department of Revenue’s sales tax deal with Amazon was denied.
Amazon and the state reached an agreement on Jan. 25 for the online retail giant to begin collecting and remitting sales tax voluntarily on purchases made by Mississippians, a move the DOR says could bring in $15 million to $30 million per year.
Mississippi Watchdog also filed a request for the records and was denied by the DOR due to “confidentiality statutes.”
Hurst and the Mississippi Justice Institute have requested an expedited review process since the DOR held an oral proceeding on a proposed rule that could establish an internet sales tax on Feb. 15, which could mean the agency could issue a final rule in less than 30 days.
Hurst said a lot of questions could be answered by disclosing the agreement with Amazon. Those include the following:
- Could taxpayers be obligated in the future under any agreement?
- Did Amazon make a deal with the DOR in exchange for the agency promulgating a rule to establish an internet sales tax?
- Was the deal structured to give Amazon an advantage over its competitors?
- Did Amazon receive a benefit for voluntarily reaching a deal with the DOR?
- Did the DOR agree to shield third-party sellers on Amazon from collecting use tax?
“The law in Mississippi is to err on the side of disclosure,” Hurst said. “With all of the holes in their arguments as to confidentiality, it is clearly something that must be disclosed under the public records act.”
In its letter denying Hurst’s request, the DOR says it would require a “proper judicial order” to release the deal or any communications or other documents related to it due to confidentiality statutes.
Hurst’s complaint says that the confidentiality statutes only apply to individual tax returns and applications, not a voluntary deal with company that isn’t subject to the state’s use tax.
The DOR cited code sections in its rejection letter regarding the state’s sales tax, corporate franchise tax and income tax, but omitted the one governing the state’s use tax. Hurst says that’s because the use tax is the only one of the four without a confidentiality statute.
Taxpayers are supposed to pay a 7 percent “consumer use tax” individually on all purchases from out-of-state firms, which also is the same rate as the state’s sales tax.
The reason why Amazon is not subject to the use tax is because of the 1992 U.S. Supreme Court decision Quill Corp. v. North Dakota, which requires retailers to have a physical presence in a state before it may force them to collect sales tax.
The online retail giant this year has agreed to voluntarily collect state sales tax in deals with Iowa, Louisiana, Missouri, Nebraska, Rhode Island, South Dakota, Vermont and Wyoming.