Amazon Will Get $5.6 Million Tax Break Under Deal With Utah

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Tripp Baltz

Amazon.com Inc. will receive a $5.6 million tax incentive from Utah under an agreement approved by the Governor’s Office of Economic Development.

The office approved a post-performance incentive agreement for the world’s largest internet retailer at a public meeting June 8. The agreement provides a tax credit rebate of $5.68 million across the eight-year agreement in exchange for the company’s building a $200 million fulfillment center projected to create several hundred jobs, the office said.

The project location, size, and timeline will be announced in the coming weeks, but the agreement calls for it to be built in Salt Lake City, according to the governor’s office. Some 130 of the planned jobs for the center meet the criteria for the incentive agreement, meaning they will pay at least 110 percent of the Salt Lake county average wage.

The projected new state wages over the life of the agreement are expected to be approximately $86 million, according to the governor’s office. Projected new state tax revenue, as a result of corporate, payroll, and sales taxes, is estimated to be $28 million over eight years.

Rebate Program

The state’s post-performance Economic Development Tax Increment Finance (EDTIF) tax credit rebate program allows Amazon to earn up to 20 percent of the new state taxes the company will pay over the agreement. Each year, as Amazon meets the criteria in its contract with the state, it will earn a portion of the total tax credit rebate.

Amazon officials didn’t immediately respond to requests for comment.

Amazon just this year began collecting and remitting Utah’s state 4.7 percent sales and use tax, in addition to local option sales taxes. Sen. Wayne Harper (R), a member of the Senate Revenue and Taxation Committee, told Bloomberg BNA June 12 the company made a policy decision to enter into voluntary collection agreements with Utah and the other 44 states that have have a sales tax, and the decision had no connection to the post-performance economic development tax incentive.

The decision to collect “was made long before the business decision to locate a fulfillment center in geographic area that met its needs,” he said.

Utah also announced June 8 a tax credit rebate of up to $1 million for Podium Corp. Inc. for a planned expansion that will bring an estimated 426 jobs, and a tax credit rebate of almost $760,000 for Alliance Data to build a facility in Draper expected to create about 105 jobs.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

The web site for corporate incentives provided by the Utah Governor's Office of Economic Development is http://business.utah.gov/programs/incentives/.

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State