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  (Source: media.komonews.com)
Texas Comptroller charged Amazon $269 million in sales taxes that were not collected on online sales in the state, provoking Amazon to close its distribution center and cancel plans to expand its operations in Texas

Amazon has announced that it is closing one of its distribution centers and canceling operation expansions in Texas due to a dispute with the state's comptroller over millions of dollars in sales taxes. However, Governor Rick Perry (R-Texas) isn't letting the internet retail giant go that easily. 

Amazon made the decision to close a suburban Dallas distribution center after Texas State Comptroller Susan Combs told the company that they were responsible for $269 million in sales taxes that were not collected on online sales in the state. 

"We regret losing any business in Texas, but our position hasn't changed: If you have a presence in the state of Texas, you are required to pay sales tax just like any other business that has a presence in Texas," said Allen Spelce, a spokesman for Texas Comptroller Susan Combs.  

But Perry disagrees with Combs' decision to charge Amazon millions of dollars in sales taxes, and to let the company leave the state of Texas. Amazon's decision to close its Irving distribution center and cancel plans to expand operations in Texas will result in job losses as well as the loss of tens of millions of investment dollars to the state.

"That is a problem and I would suggest to you that we need to look at that decision that our comptroller made," said Perry. "The comptroller made that decision independently. I would tell you from my perspective that's not the decision I would have made."

Perry added that Combs shouldn't have pinned the sales taxes on Amazon's Dallas distribution center, since it doesn't have a storefront and is not responsible for such matters. 

"You couldn't go in and buy anything out of that store, and that, historically, has been the way we defined whether you pay taxes or not - if you had a storefront," said Perry. "This obviously didn't have a storefront. It was specifically there to manage products that need to be shipped out." 

Perry is looking to get the legislature involved to keep Amazon in Texas, but it may already be too late. Amazon's Dave Clark, vice president of operations, has announced that the company will close its Irving distribution center on April 12, and will cease all plans to expand operations in the state of Texas, which will eliminate 1,000 potential jobs and cut tens of millions of potential investment dollars to the state as well. 

"We don't want to be onerous on tax policy where businesses and I would say I'm having a hard time getting my hands around this one," said Perry. "Texas should be a bastion for businesses, not one where they're sitting there going 'we'd rather go over to Oklahoma where we could get a better deal.' Texas doesn't want to make itself less competitive with its tax decisions."  

According to Spelce, Texas loses about $600 million in online sales taxes annually. Currently, a case is pending before the State Office of Administrative Hearings regarding the $269 million in sales taxes from Amazon. 



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RE: Big Parasite
By Drag0nFire on 2/14/2011 10:48:49 AM , Rating: 2
It's not Amazon that uses the state services; rather, it is the people of Texas who purchased their merchandise at Amazon that consume state services. This is the purpose of "sales tax" - a percentage of the value of all purchases made by the People of Texas are collected by the government to fund state services for the People of Texas.

Also remember that as a citizen, you owe sales tax on all purchases made including those made at a merchant that has no business presence in your state. The difference is simply that Amazon is not responsible for collecting tax revenues if it has no business presence in a state.

This said, the current system is broken. Most online buyers do not pay the sales tax, and this loophole for online purchases is becoming more and more significant in terms of revenue lost to the state governments. I think it will be important to resolve it decisively in a just and uniform manner. The system as it is places unfair burden on brick&mortar businesses.


RE: Big Parasite
By theapparition on 2/14/2011 11:07:57 AM , Rating: 3
Thank you Drag0nFire, very well put.

To the OP, Amazon should not have to pay $249mil in taxes, but they should have collected $249mil in sales tax from Texas consumers. The law is clear, if you are required to collect tax, and don't, you are repsonsible to pay them and can't retroactively go back after employees/customers. Amazon only has themselves to blame for this.

quote:
This said, the current system is broken. Most online buyers do not pay the sales tax, and this loophole for online purchases is becoming more and more significant in terms of revenue lost to the state governments. I think it will be important to resolve it decisively in a just and uniform manner. The system as it is places unfair burden on brick&mortar businesses.

Couldn't agree more.


RE: Big Parasite
By paydirt on 2/14/2011 11:48:48 AM , Rating: 2
I posted above. The non-collection of sales tax:

*hurts property values (lower retail activity, fewer retail jobs, fewer jobs to maintain/support retail operations, lower employment leads to less demand for residential housing)
*hurts local tax collection (primarily due to lower property values, but also from local sales tax non-collection)
*directly hurts state tax collection
*hurts local employment (the loss of the TX facility might cost 1,000 direct jobs, but it may have already destroyed many more jobs--which will likely be restored)

local and non-local businesses should be on the same footing.

AND I'm a conservative/libertarian


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