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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.”



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RE: The Gov Needs To Back Down
By FITCamaro on 5/14/2008 12:05:47 PM , Rating: 2
Anyone who actually pays taxes in this country is for a flat federal income tax rate. The problem is that nearly 50% of American's don't pay taxes. If a flat tax went into place, they might have to. Plus all the lower income people say that it would benefit the rich. It would benefit nearly all of us.


RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 12:19:00 PM , Rating: 2
True to some extent, but I have had several conversations with people (mostly Democrats) that don't like the idea. They feel like the rich can "afford" it and should have to spread the wealth. I tell them that is like a forced 10% charitable contribution except the federal government picks where it goes. That I'd be more inclined to accept, if I could pick the charity cause the government sucks at it :)


RE: The Gov Needs To Back Down
By Nik00117 on 5/14/2008 1:26:21 PM , Rating: 2
The rich can afford it. Lets assume person A doesn't have the best of what life can offer. Therefore he has a decent job making 45k a year. Its enough to feed his faimly, and put some gifts under the tree for christmas. Then you got Person B, now person B was a bit lucky, and had a great idea. he is now making 170k a year. Now the base tax is 25% of your income. Ok so that makes persons B income 33750. Still liveable, but wait a minute Person B still has 127,500. Way can't we take another 10% or so? and now he has 110,500. Hes still a happy man with little worries, he just paid 10% extra though because he can afford it. As simple as that. I intend on beign rich and when I am rich I expect to pay more taxes.


RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 1:33:11 PM , Rating: 2
The reason you don't take the extra 10% is because this is not a socialist country. That is what socialism is. Yes from a pure numbers point of view he can afford it, but again we are not socialists so what business does government have in determinig how much one person can afford over another. Taxes should be fair and place on everyone equally, they aren't but they should.


RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:44:51 PM , Rating: 2
quote:
I intend on beign rich and when I am rich I expect to pay more taxes.

How do you define rich?

I just had this conversation with my 7 y/o who asked if we are poor, rich or just ok. I told him it depends on who you ask.

If you make more you WILL pay more under a flat tax (although i'd prefer a totally use tax based system). There is no reason to punish someone who has worked to get where they are. Even if it is just a lucky idea, its their lucy idea and they deserve what they get.

If you think rich people should pay more, make taxes flat and add a voluntary section to the return. Trust me, no one thinks they have too much money except for someone with less money.


RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:50:46 PM , Rating: 3
We are all rich. If you live in a present day, industrialized nation, you are rich. Period.

The poorest in our society has things that kings a few hundred years ago would have given most of their kingdom for.

The most common anti-biotics are now nearly free (and often free through some private pharmacies). About a hundred years ago, the US president (Coolidge) lost his son to an infection that spread from a blister in his heel from playing tennis, all while under the best medical care in the country.

We have hot and cold running water, indoor plumbing and toilets... unimagineable. No need to trek out to the outhouse in the mud, snow and sleet if you wake up in the middle of the night and realize you have the flu.

I personally have at least one instance where I would have died if it had not been for modern medicine (e-coli, mexican restaurant). In the recent past, most people had one or more close family members die from things we hardly blink an eye at today.

Thousands of food choices that cost a small fraction of the average income. Just a couple hundred years ago, most would have to spend 10 hours a day just working to feed themselves. The main dietary problem of our poor is obesity, not starvation.

The list goes on and on. If we continue increasing in wealth at our current rate, the average person in the US will be as rich as Bill Gates (adjusted for inflation) in about 400 years. Throughout history, the average family income has been about $600/year in today's dollars. We are truly wealthy.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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