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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 wookie1 on 2/14/2011 11:44:20 AM , Rating: 5
What do you propose to do if people buy something from an international seller? How would you collect taxes from them? And if you can't, why wouldn't Amazon simply move all of their operations out of the country?

Are you suggesting that the State/local governments be able to monitor all of their residents somehow to ensure the taxes are collected from them?

RE: Good on Amazon
By paydirt on 2/14/11, Rating: -1
RE: Good on Amazon
By theapparition on 2/14/2011 1:39:11 PM , Rating: 4
If international businesses (we are not discussing small mom & pop sellers) choose not to collect state tax, local tax, VAT, or flat tax from their consumer (as Amazon did), then states (or the taxing entity) can send the tax bill directly to the international business (as Texas did). If Amazon was in British Columbia instead of the U.S., the situation would be the same.

That is completely incorrect information.
Only if the international business maintained a local presence are they obligated to collect sales tax for the state. If not, then burden lies on the taxpayer to correctly report and pay that tax directly to the state.

In the Amazon case, they maintained a business presence in the state, and hence were obligated to collect tax and redistribute to the state. If they were international, that situation, as you correctly pointed out, would not change.

However, if they had no local presence, then that company is under no obligation to collect local taxes. Plain and simple.

RE: Good on Amazon
By kattanna on 2/14/2011 12:23:02 PM , Rating: 1
why wouldn't Amazon simply move all of their operations out of the country?

because international shipping costs and delays would make it unattractive

RE: Good on Amazon
By FITCamaro on 2/14/2011 2:35:08 PM , Rating: 2
You are required to pay the taxes on anything bought. You might choose not to. But you run the risk of being caught. And shouldn't complain if you are.

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

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