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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 sviola on 2/14/2011 11:40:12 AM , Rating: 2
So, if I don't live in TX and buy something there, all I have to do is prove I don't live there and they'll not charge me for the sales tax?

RE: Big Parasite
By Solandri on 2/14/2011 12:45:58 PM , Rating: 2
That's really the crux of the issue. In the old days, the buyer and the seller were in the same state so it made sense for the state to be able to collect taxes on it. Mail order changed that. What happens if the buyer is in one state and the seller is in another? Which state is entitled to tax the transaction? The seller's? The buyer's? Both? Neither? In international commerce, differences in taxation are usually normalized by import/export taxes. But the Constitution and court precedent established that states are prohibited from imposing such taxes at their borders.

Sears was the first company to really capitalize on this, running the first highly successful mail order business. The problem really should have been taken care of at the Federal level back then in the early 1900s. Unfortunately it wasn't so we're still stuck with it today. California was the first state to use the concept of nexus to start collecting sales taxes (on IBM sales if I remember right, IBM being a New York company but with offices in California), and more and more states are using that. But it still doesn't address the basic problem - are the taxes based on the buyer? Seller? Both (double taxation)? Neither (the current situation)?

RE: Big Parasite
By tech4tac on 2/14/2011 1:26:09 PM , Rating: 2
Generally, if you deliver via a common carrier (USPS, UPS, Fedex, DHL, etc) the state & district the item is delivered to is entitled to the sales tax. If the seller have a nexus in that state, they are responsible for collecting the sales tax for the state, otherwise the buyer is responsible for paying the use tax on their state tax return. Some states have laws that complicate matters but this is generally the case. The main problem for business with interstate sales is navigating the tens of thousands of different ever-changing state & district taxes and laws. If they'd just create 1 Federal or 1 state wide internet sales tax rate & law, it'd make things much easier to implement. However, in the Federal case, a constitutional amendment may be needed for this to happen.

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