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Amazon to open distribution centers near Richmond VA but will not collect VA taxes

Amazon announced plans to open two distribution centers in Chesterfield and Dinwiddie counties.

The centers will open next Fall inside the Meadowville Technology Park  in Chesterfield and the Dinwiddie Commerce Park in Dinwiddie. The centers would combine to create 1,350 new jobs.

Amazon is investing $85 million on a Chesterfield facility, which will create more than 1,000 jobs, and $50 million in Dinwiddie, creating more than 350 jobs.

“We’re grateful to Governor McDonnell and other state, county and local officials for their commitment to our investment in Virginia,” Dave Clarke, vice president of Amazon North American Operations, said in a statement.

The localities were chosen because of the area’s work force and the speed that the facilities can be built, said Jim Cheng, Virginia’s secretary of commerce and trade. The centers are expected to be completed this fall.

Gov. Bob McDonnell approved $3.5 million in grants from the Governor’s Opportunity Fund to help the localities with the project. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $850,000 for the Dinwiddie project.

The Virginia Economic Development Partnership worked with Chesterfield County, Dinwiddie County, the Greater Richmond Partnership, and Virginia’s Gateway Region to secure the project for Virginia. Governor McDonnell approved a total of $3.5 million in grants from the Governor’s Opportunity Fund to assist both Chesterfield County and Dinwiddie County with the project. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $850,000 in Tobacco Region Opportunity Funds for the Dinwiddie County project. The company is eligible to receive benefits from the Virginia Enterprise Zone Program, administered by the Virginia Department of Housing and Community Development. Through its Virginia Jobs Investment Program, the Virginia Department of Business Assistance will provide funding and services to support the company’s recruitment and training activities.
"We are so pleased that international Internet giant Amazon has selected Chesterfield County for their new one million-square-foot fulfillment center," said Art Warren, the Chairman of the Chesterfield County Board of Supervisors. "It is exciting this outstanding announcement coincides with the opening of the new Meadowville interchange which will benefit everyone, present and future. And, the infrastructure surrounding this announcement further positions the Meadowville technology Park as a key destination for business. Welcome Amazon as the newest member of our corporate family."
“Dinwiddie County is extremely pleased with Amazon’s decision to locate a fulfillment center in the Dinwiddie Commerce Park,” said Doretha E. Moody, Chairman of the Dinwiddie County Board of Supervisors. “This is an excellent example of the commitment of the Board of Supervisors to economic development and creating employment opportunities for our community.”
"The Tobacco Commission is glad that we were able to team up with Dinwiddie and the Governor’s Office to attract Amazon to Virginia,” said Senator Frank M. Ruff, Jr., a Commissioner of The Virginia Tobacco Indemnification and Community Revitalization Commission. “We believe that they will be a good employer and a good corporate citizen that will provide good jobs for the region. We believe that Amazon will be pleased with our workforce and the region."

The Seattle, Washington-based company employs more than 40,000 people worldwide.

Location map below

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Thursday’s announcements follow an agreement between Amazon and Tennessee over the collection of sales taxes. The retailer would start collecting Tennessee sales taxes in 2014. Republican Gov. Bill Haslam and Amazon officials in October announced the agreement for the company to begin collecting the state’s sales tax on items sold to customers in Tennessee.

Amazon was originally granted an indefinite waiver on collecting state sales taxes in Tn. as part of a deal struck by Haslam’s Democratic predecessor, Phil Bredesen, that led the company to build its first two distribution centers in Tennessee earlier this year.

Amazon has fought with several states over Internet sales tax collection as cash-strapped state governments grapple with how to capture the sales tax revenues that go uncollected from online purchases. In some cases, the online retailer severed ties with affiliates in states that passed laws in an attempt to collect sales tax.

Virginia law requires a retailer to collect and remit the state’s 5 percent sales taxes if it "maintains or has within this commonwealth, directly or through an agent or subsidiary, an office, warehouse, or place of business of any nature." Despite the distribution center it already has in the state, however, Amazon has operated under an exemption to that law and does not include sales tax on purchases made in Virginia.

In response to the Amazon project announced Thursday, the Virginia Retail Federation  released a statement calling for Virginia leaders to level the playing field between Amazon and brick-and-mortar merchants.

"The Virginia Retail Federation assumes that Amazon has agreed to collect state sales tax in Virginia now that they will unquestionably have a physical presence in the state," said Ray Mattes, president and CEO of Retail Alliance, in the federation’s statement. The alliance represents Hampton Roads retailers and is part of the federation.

But state officials said Thursday that Amazon won’t have to pay sales taxes after it builds the new warehouses, either, because the facilities are being built and operated by a separate distribution company, not the actual retail business.

"This was solely about jobs and economic development here," said McDonnell, calling the sales tax issue a discussion for "another time."

Congress might ultimately settle the matter. Pending federal legislation would require large online retailers to collect taxes on purchases regardless of where those retailers are based or where they have a physical presence.

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