backtop


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 Amazon.com 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 “Amazon.com.kydc, 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 “Amazon.com” 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 Amazon.com’s subsidiaries’ Texas operations.”



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: The Gov Needs To Back Down
By 16nm on 5/14/2008 11:16:38 AM , Rating: 2
Yes, it should be left alone, but as it is, Amazon appears to owe some taxes. Basically, Amazon screwed up. Let's see what their lawyers can do for them first.

quote:
Complicating matters are the fulfillment center’s records filed with the state, which in 2006 and 2007 listed “Amazon.com” 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.


RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 11:36:50 AM , Rating: 2
No it shouldn't. Amazon has a 6.25% advantage over sales in TX because they do not collect the tax. How does that encourage a free market when someone is going in with a built in advantage?


RE: The Gov Needs To Back Down
By 16nm on 5/14/2008 11:44:25 AM , Rating: 2
Like it or not, that's the way the law is today. Had Amazon not filed incorrectly, they would not owe the tax as per the law. As the article states, Amazon filed incorrectly so they owe unless their lawyers can work it all out.


RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 12:13:28 PM , Rating: 2
True and if they did screw up then your right.

I was speaking to the bigger issue of Etailers having a competitive edge. Should that be "left alone", IMHO it should be addressed.

Problem is how. If you have company XYZ in OK, and I buy something from them in TX. How does a TX law apply to them? Now you are talking about one state regulating business in another, and that is not how it is done here, states cannot regulate other states. The only way it could work would be at a Federal level, but then who gets the money? Should TX just cause I live here, what about OK they have created a favorable place for XYZ to do business so why don't they get anything?

And take the Amazon or any other Etailer out of the picture, what happens if I just drive accross the border and buy it. OK has no sales tax they rely on income tax. So if i don't file the use form I get off tax free.

Again no perfect answer.


By Johnniewalker on 5/14/2008 5:45:50 PM , Rating: 2
Amazon also has a few disadvantages. They have to pay shipping and the consumer has to wait to get their order. Those two disadvantages can easily outweigh the 6.25% advantage. Still with those disadvantages, Amazon has build a successful business is able to offer the consumer something that is very underappreciated. Another choice. If you think Amazon is bad for a free market, you must be crazy.


"Folks that want porn can buy an Android phone." -- Steve Jobs

Related Articles
IRS Wants to Tax Online Sales
May 8, 2007, 9:30 AM













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki