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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: Good on Amazon
By invidious on 2/14/2011 10:58:30 AM , Rating: 1
Amazon isnt standing up for anything righteous, they simply don't want to pay their taxes. There is nothing to be applauded. If you don't like state sales tax then don't sell to customers in that state.

Texas isnt asking anyone else to figure out how to enforce their taxes, they are doing it themselves, right now with this. Texas isn't elivating this to the federal level or involving any 3rd party private sector entities. I don't see anything in the article suggesting that Texas is pushing anything off onto the private sector.

Texas needs to enforce their sales tax at the time of sale if they want their money. And in since they haven't been doing that they need to make a choice of whether the back taxes are worth losing future jobs. They make their own bed, plain and simple.

RE: Good on Amazon
By Motoman on 2/14/2011 11:00:24 AM , Rating: 2
By the governor's own quote, Amazon's TX operations didn't match their established norm for sales taxation. That seems to make your argument invalid.

RE: Good on Amazon
By invidious on 2/14/2011 11:11:20 AM , Rating: 2
State senate creates law, comptroller enforces it. Governor usese political power to bend and break the law. Point being that the governor doesn't make or enforce the rules, it is their job to run the state WITHIN the rules.

RE: Good on Amazon
By Motoman on 2/14/2011 11:20:02 AM , Rating: 2
Ultimately, as stated above, Amazon's action of leaving TX is their only correct course of action - whether they wind up having to pay that bill or not.

They clearly don't like the law and/or this ruling against them - so they can leave. It's the only thing they can do to avoid having to deal with a law and/or ruling that they don't like again in the future.

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