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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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Here's a silly idea
By ewhite06 on 2/14/2011 1:32:16 PM , Rating: 2
I'm not an economist or anything, but why not get a flat "internet sales" tax or whatever you want to call it? Set it at 5% nationwide - everyone pays the same rate regardless of who you are or where you are. If the states whine "but our sales tax is 8% normally" we would reply "well, currently you are collecting 0% for online sales. Which would you rather have?" It's still cheaper for the consumer than going B&M and the states still get their piece.

It simplifies it for the online retailers to track and distribute how much tax they need to pay to the states because that is the KEY point behind this issue. The Amazons and every other mom-and-pop online shop don't want to pay or can't afford to pay for the accounting overhead to track taxes and send them to the states.

Admittedly, you would see a rush on companies setting up shop outside the US to get around all this but that has issues all its own.

RE: Here's a silly idea
By EricMartello on 2/14/2011 11:59:38 PM , Rating: 1
Here's an even sillier idea:

How about we hold the states accountable for the money they're spending. There is so much fraud and corruption going on behind closed doors, not to mention wasted spending on failed social programs that piss away tax dollars every day. This whole notion of spend more and pass the bill onto the people (or businesses) is a joke...the USA is struggling for jobs and making it more expensive to do business in the USA is not helping anything.

States already siphon money from its residents with income tax, property tax, tolls, fuel tax, taxes on alcohol and tobacco...yet they continue to say they need more. Really? I'd love to see how the money they do get is being spent and I think the people should play as larger role in deciding what the money is spent on.

To all of the people who simply say "it's the law, we should accept it"'re full of shit. The law should always have the interests of the people in mind. Laws which seek only to make politicians richer while the states continue to waste the money they do have are NOT in the interests of the people.

The USA is quickly becoming more like a communist country than ever's so far gone from what it was originally established to be by the founders...big, bloated, inefficient and corrupt governments are merely the tip of the iceberg.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007

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