Walmart, Best Buy, Sears Holdings Corp., Home Depot and Target are coming together to try to force Amazon to collect sales taxes

Amazon has been under a lot of tax-related pressure from stores that see the online retailer as an unfair competitor; and as the recession wears on, store chains are pushing harder than ever.  

Amazon has faced some problems with states and retailers who have urged the online retail giant to collect sales taxes on goods sold through the site. But Amazon has held its ground, fighting those who have tried to force the online retail giant to place sales taxes on its items. For instance, Amazon teamed up with the American Civil Liberties Union in a legal battle against the North Carolina Department of Revenue in order to protect customer information, which was being requested by the N.C. Department of Revenue in order to collect sales use taxes that amounted to about $50 million.

In a separate dispute, Texas Comptroller Susan Combs charged Amazon $269 million in uncollected online sales taxes in the state, which prompted Amazon to close a suburban Dallas distribution center as well as cancel plans to expand operations in Texas. 

Now, some of America's largest retailers are hot on Amazon's trail. Stores like Walmart, Best Buy, Sears Holdings Corp., Home Depot and Target are coming together to try to force Amazon to collect sales taxes by supporting the Alliance for Main Street Fairness, which fights to change sales-tax laws. This alliance is a Virginia-based group that normally works with "mom-and-pop" stores, which see Internet retailers as unfair competition. But now, the Alliance for Main Street Fairness is joining forces with some of the largest store chains in the country in the battle against Amazon. 

"It's fair to say that both large and small businesses are active [in the campaign]," said Danny Diaz, spokesman for the Alliance for Main Street Fairness.

According to recent reports, the store chains are targeting Amazon more than ever right now due to budget shortfalls and the recession's effect on how consumers shop. Politicians have been looking to increase revenue without boosting taxes, and collecting from online retailers seems like an easy answer. For instance, California is facing a $26.6 billion shortfall where only 1 percent of use tax is paid on online purchases through tax forms and $1.1 billion is uncollected.  

"We're seeing an increased urgency from states trying to make up for lost revenue," said Laura Bishop, senior director of government relations for Best Buy. 

Amazon has responded by stating that it has followed the law all along. According to a 1992 U.S. Supreme Court ruling, the only merchants who have to collect sales taxes are those who have a physical presence in the state. At the moment, Amazon only has to collect taxes in Kansas, Kentucky, New York, North Dakota and Washington, and it complies. 

Despite this ruling, store chains pressed on and backed the passage of a new law in Illinois that would make Amazon collect sales taxes if it employed marketing affiliates within the state. The law was signed last week by Illinois Gov. Pat Quinn, and in response, Amazon dropped 9,000 Illinois affiliates in order to avoid collecting taxes. 

"These new tax laws affecting affiliates are supported by the large national retailing chains that covet the affiliate advertising programs of their competitors," said Paul Misener, vice president of public policy for Amazon. 

Stores like Walmart and Sears have even offered to work with Amazon affiliates, which are websites like blogs that direct online traffic to Amazon's website and make commission by doing so. In addition to directly addressing affiliates, store chains and states plan to pressure Amazon by pushing for legislation that clearly states that sales taxes must be collected if it "controls in-state warehouses through related companies." Texas and Arkansas are just two of the states pushing for laws like this. 

"The rules today don't allow brick-and-mortar retailers to compete evenly with online retailers, and that needs to be addressed," said Raul Vazquez, executive vice president of global e-commerce for Walmart.

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