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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: Big Parasite
By bryanbrun on 2/14/2011 11:09:14 AM , Rating: 1
So if Amazon's warehouse catches on fire, who will put it out?

The roads that are torn up by the thousands of deliveries to and from the warehouse are to be paid for by whom? It makes no sense that UPS/Fedex bare all of this cost.

The warehouse benefits from the general state of order and security imposed by the local police force. Who pays those salaries?

Amazon is a parasite living off of the life blood of the local and state tax payer.

RE: Big Parasite
By spamreader1 on 2/14/2011 11:31:45 AM , Rating: 2
Fire dept paid by property tax.

Road repairs are paid for by property tax and a combination of fuel taxes and vehicle registration/inspection.

also note I think amazon should be collecting taxes on purchases from texas residents. just saying don't confuse the facts.

RE: Big Parasite
By Astral Abyss on 2/14/2011 1:08:58 PM , Rating: 2
^ Yes, this is correct. Take a look at your list of what your property taxes goes to. A huge portion of it is police, fire, and schools.

And since Texas doesn't have a state income tax, they tax the hell out of you on everything else, property taxes being one of them. I lived in Texas for 7 years and I can tell you with certainty that they will charge and tax you for everything they possibly can, including utilities.

I'm sure Amazon was already paying out the ass for property taxes, utilities, vehicle license fees/fuel, not to mention the employees they obviously had working there.

Maybe Amazon should have been collecting those taxes, but the fact is, Texas was still making bank off Amazon and Amazon was employing local residents to run the operation. They got greedy and stupid and some insignificant beaurocrat thought they'd stick it to Amazon for cheating the system.

The smarter way to handle that would have been to send Amazon a warning and a fine and say, according to such-and-such law you are required to collect taxes, and we will be collecting them in the future whether you charge them or not.

Someone just figured out that collecting that back-tax from Amazon is chump change to what they would have made in the long run from Amazon. And guess what, Amazon is still going to do billions in buisness in Texas and now won't having to pay taxes or support their local economy.

Brilliant job Texas...

RE: Big Parasite
By The Raven on 2/14/2011 3:54:22 PM , Rating: 2
Great post.

I think the comments here prove that the gov't has grown too big because the citizens can't keep the various tax systems straight. It should be a lot simpler and clear cut.

Oh and by the way... rather than having them ship it, I am going to cross the river, buy something in IL and tell them that I live in MO and that they should tax me accordingly. I don't think that will fly, am I right my brother?

RE: Big Parasite
By T2k on 2/14/2011 5:39:08 PM , Rating: 2
No because it's the DELIVERY ADDRESS, dumbo.

RE: Big Parasite
By The Raven on 2/15/2011 11:57:08 AM , Rating: 2
That is right to my point, which you obviously didn't get.

The store in IL wouldn't be delivering to me in MO. UPS/FedEx would. (Because I am the one to pay for it to be delivered, right?) So I get taxed at the MO rate and the money goes to MO? (Or in the case of the article, TX?) While if I go pick it up myself I get taxed at the IL rate?

Please explain how this makes sense. In the case of the story, TX is begging for taxes that should be going to Bethesda, MD or wherever Amazon is based.

Here's an idea for B&Ms... get an online presence and "steal" taxes from Amazon's state. That would level the playing field rather than complain how big Amazon is.

The reason Amazon is so big is that they are online. They wouldn't be so special if they weren't. Everyone else needs to do the same or offer meaningful value to their B&M (like personalized service, etc.) or they should just be prepared to step out of the market. Because that is what it is: a market. Not a charity auction.

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