INDIANAPOLIS -- Amazon.com and the state have reached a deal for the online giant to begin collecting sales tax in Indiana in 2014.

Gov. Mitch Daniels and Amazon executives made the announcement at a news conference Monday afternoon.

"They agree with us that all those who sell remotely -- Internet, catalog or otherwise -- ought to, as soon as possible, be collecting what is duly owed," Daniels said.

The online retailer has been targeted in recent months because, unlike brick-and-mortar stores, it isn't currently required to collect and remit the state sales tax.

Critics have argued that the state loses out on $300 million in sales tax each year due to online purchases.

Daniels said he believes the move will generate up to $25 million a year in sales taxes for the state and that the 2014 target will provide enough time for logistics to be worked out.

It could also give time for federal legislation to be passed requiring sales tax be collected on all online purchases.

“The only complete answer to this problem is a federal solution that treats all retailers and all states the same," Daniels said. "But for now, Amazon has helped us address the largest single piece of the shortfall, and we appreciate the company working with us to find a solution."

Still, the Indiana Retail Council questioned why the state would wait through another two holiday shopping seasons to level the playing field between brick-and-mortar stores and the online giant.

"This deal does not go far enough. Indiana’s Main Street retailers need relief now, not in two years," Indiana Retail Council President Grant Monahan said in a news release. "The Hoosier way isn’t to kick the can down the road."

Simon Property Group had filed a lawsuit aimed at forcing Indiana to collect the sales tax from Amazon. The company said Monday it would drop the suit.

"As an Indiana-headquartered company that employs thousands of Hoosiers, Simon Property Group is pleased that the state of Indiana took this action which benefits Main Street retailers and hundreds of thousands of retail employees in our state that deserve to be on a level playing field with online retailers," David Simon, chairman of the board and CEO said in a statement.

Indiana will become the fourth state to reach such an agreement with Amazon.

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