Print 62 comment(s) - last by dever.. on May 15 at 2:12 PM

State thinks online giant owes them millions of back taxes

Online retailer may owe the state of Texas four years of back sales taxes for purchases from Lone Star residents, due to a fulfillment center the company owns in Irving, Texas.

Following recent developments in New York, which recently passed a controversial sales tax that Amazon feels unfairly targeted by – some state officials nicknamed it the “Amazon Tax” – the Texas Comptroller’s office decided to open an investigation into Amazon’s Irving fulfillment facility, after being contacted by a reporter from the Dallas Morning News with questions regarding the company’s tax payments.

Amazon says that state officials are fully aware of the facility and its operations, and that it does not have to pay sales taxes because it operates the fulfillment center under Amazon subsidiary “, Inc.”

“We remain in compliance with all Texas laws governing sales tax collection,” said Amazon spokeswoman Patty Smith. Texas law doesn’t require subsidiaries to collect sales tax.

Complicating matters are the fulfillment center’s records filed with the state, which in 2006 and 2007 listed “” as the owner instead of its “kydc” subsidiary. Such a mistake, if it was one, would force the company to be liable for millions in back sales taxes over the past four years, which the Comptroller’s office fully intends to collect. The current sales tax rate in Texas is 6.25%.

Currently, internet retailers are only entitled to collect sales tax from customers residing in a state that the company has a significant presence in. While out-of-state customers are still obligated to pay “use tax” for out of state purchases, actual consumption is untracked and, consequently, most consumers choose not to pay it. Both United States federal and state governments have made it clear that they intend to change this system: several states, like New York, are gunning for ways to enforce use taxes, and the IRS last week made it clear that it wants to tax transactions through user-to-user sites like eBay and Craigslist.

Nonetheless, the Texas Comptroller’s Office says it will continue its investigation, and does not know when it will complete.

“We continue to interact with and cooperate with local and state Texas tax officials at many levels,” said Smith. “The state of Texas is fully aware of’s subsidiaries’ Texas operations.”

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RE: The Gov Needs To Back Down
By SilthDraeth on 5/14/2008 10:17:12 AM , Rating: 2
The "use tax" I hadn't actually heard of or known about this. But it stands to reason. Anytime an item exchanges hands the US wants to tax it again. And even when it doesn't change hands, in the case of land, you have to pay taxes on it every year never mind that the land isn't generating any income.

RE: The Gov Needs To Back Down
By ebakke on 5/14/2008 10:36:12 AM , Rating: 2
Kind of ridiculous, huh?

RE: The Gov Needs To Back Down
By Polynikes on 5/14/2008 11:42:14 AM , Rating: 2
Ridiculously. ;)

RE: The Gov Needs To Back Down
By deeznuts on 5/14/2008 1:30:40 PM , Rating: 2
Yeah, ridiculous that you don't want to help pay for services on that property. You do like water and sewage and electricity and streets and police and ... well you get the point.

It's not the US that wants to tax this stuff, it's the States. A use tax has been around for a while. It was kind of an honor system, and states normally didn't go after you. However, more recently some of the more aggressive states, such as California and New York, started putting use statements into their returns so when you don't declare a use tax, and sign, but you did make out of state purchases, well now you are guilty of falsifying your return. Little useless tidbit I remember from being an enrolled agent a couple of years ago.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:37:43 PM , Rating: 2
I think you're a bit offbase.
Water/sewage/electricity/gas/etc most people pay a private company for. If they do not they are paying the local government. The state doesnt provice any of those services to me.

Streets and police are the only things that make sense in your argument.

To say that i owe tax to my state when making an out of state purchase is BS. If i walk into Best Buy in Ohio (i live in PA) and buy somethig there i pay sales tax there. There is no way i would pay sales tax twice.

As I said in a previous post. In order to buy into this crap, you have to believe the government owns all the money. I dont..

RE: The Gov Needs To Back Down
By ninjit on 5/14/2008 1:57:32 PM , Rating: 2
The worst example of this is the Death Tax. i.e. the tax beneficiaries have to pay when they inherit anything of value from someone else.

It doesn't make any sense, because I can just give everything I own to my kids BEFORE I die, and they wouldn't have to pay anything.

Yet for some reason the government thinks that the loss of a loved one is grounds for taxation??

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:17:42 PM , Rating: 2
You can even think of this another way:

Different people prefer to give to their children in different ways. Some people think their time would be best spent interacting and teaching their kids directly.

Others believe it would be better for them to work long hours and pay a specialist to do this. Some people may spend their money on private schools while their child is yound, while another may save that money in an account and give it to them after they die.

I have my opinions as to what is best for my circumstances, but other's should be entitled to their's as well. The death tax is just another way to interfere with an individual's liberty to make what they believe to be the best decision for thier children.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 2:18:16 PM , Rating: 2
Actually you cannot just give it all away, if it exceeds a certain yearly/lifetime cap you have to pay gift tax which is just as bad.

The whole idea of double taxation on money for the inheritance tax just bugs me.

If I recall correctly it was done for families like the Rockefellers. If I'm not mistaken it was estimated that if there was no inhert. tax that family would have enough money to buy every acre of land in the US. Now certainly no one wants that, but there has to be something better than the current method.

Let's say I work my lifetime and want to leave $1mil to my kid ($1mil for a lifetime of work is not too far fetched). The tax on that is in the neighborhood of 45% that is just asinine. Fine cap it so if Gates just hordes his money there is a penalty (just to prevent the above senario), but 45% that is almost half! Plus lets not forget we've already collected 10% more than the average person most of his life plus his kids will have an extra 10% taken because they can "afford" it.

"This is from the It's a science website." -- Rush Limbaugh
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