Amazon has been fighting
tax-related battles for some time now, and as pressure to collect in some U.S.
states grows stronger, Amazon refuses to back down. In fact, Amazon's CEO sees
their demands as
Amazon is the largest online retailer in the United States with over 90 million
registered buyers. It was founded in 1994 and went live in 1995. It started out
as an online bookstore, but soon began selling CDs, computers, software, DVDs,
video games, electronics, toys, apparel, furniture, and food.
In recent years, certain U.S. states have demanded that Amazon collect sales
taxes because the retailer's affiliates operate within these particular states,
and to offset huge budget deficits. For instance, Amazon filed a lawsuit
against the state of New York because
the state tried to collect taxes from out-of-state transactions through the
online retailer. In another instance, Texas State Comptroller Susan Combs charged Amazon
$269 million in unpaid sales taxes, which pushed Amazon to
close a local distribution center and cancel plans to expand operations in the
state of Texas. Amazon has also cancelled tens of thousands of affiliate
accounts in Illinois and Colorado because of tax-related demands.
In addition, brick-and-mortar competitors like Best Buy, Wal-Mart and
Sears are complaining that Amazon has an unfair advantage in the retail
industry because of its refusal to charge taxes in certain states.
Now, Amazon CEO Jeff Bezos is saying that some U.S. states' tax demands are
violating the U.S. Constitution.
According to Bezos, a 1992 Supreme Court decision excuses Amazon and other
remote sellers from having to collect taxes in U.S. states that do not have the
company's employees or warehouses operating within its borders.
"First of all, most of where we do business - Europe, Japan, some of the
states here in the United States - we collect sales tax. More than half our
business," said Bezos. "We do collect sales taxes, the European
equivalent of value-added tax. And in the U.S., the Constitution prohibits
states from interfering in interstate commerce. And there was a Supreme Court
case decades ago that clarified that businesses - it was mail-order at the time
because the internet did not exist - that mail-order companies could not be
required to collect sales tax in states where they didn't have
what's called 'nexus.'
"And that's a very clear decision. Our point of view on this is that we
should simplify the sales tax system, and we've been consistent on this for
about 10 years. It's called the Streamlined Sales Tax Initiative. I think 22 or
23 states have signed onto it. Because the right way to fix this is with
federal legislation. That's where it can be fixed properly."
The Streamlined Sales Tax Initiative promotes simplified sales and use tax
collection and administration by retailers and states by minimizing costs and
administrative burdens on retailers that operate in multiple states and collect
As of right now, Amazon collects tax in Kansas, Kentucky, New York, North
Dakota and Washington. Another 40 U.S. states have sales taxes, but are
supposed to document and pay tax on out-of-state untaxed sales, but rarely do
either because they're unaware of this or just don't want to. Amazon has made
it clear that it would comply with state tax collection if
Congress mandated it more clearly.
Just this month, Amazon praised states like Arizona and Indiana, whose
governor's do not demand the collection of taxes. Amazon plans to promote
growth in these areas, and even announced plans to expand three warehouses.