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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 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.

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs
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