Amazon Announces It's Leaving Texas In Tax Dispute; Governor Blames Comptroller, Says He'll Fix

from the politics-is-about-power dept

You may recall late last year that the state of Texas sent Amazon a tax bill for $269 million. The issue, as always, is the question of whether or not Amazon has to collect sales tax. Technically, e-commerce companies have always said they don't have to collect sales tax in states where they have no physical presence. Of course, Amazon actually has a giant distribution facility in Texas, and also bought Woot (based in Texas) last summer. It's still tried to avoid the tax issue by claiming those are subsidiaries, not Amazon.com itself.

Apparently, that strategy wasn't working, so last week Amazon announced that it was leaving Texas over the issue, making sure to announce that it had planned to hire 1,000 additional workers at the facility. Hearing a major employer leaving the state is generally a pretty bad thing for state politicians and Governor Rick Perry realized that, because it took all of one day for him to throw the state comptroller under the bus and claim that the whole thing was a mistake by the comptroller:
"That is a problem and I would suggest to you that we need to look at that decision that our comptroller made," he said. "The comptroller made that decision independently. I would tell you from my perspective that's not the decision I would have made."
In fact, Perry publicly began to explain why Amazon shouldn't have to pay sales tax on items shipped in Texas:
"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. This obviously didn't have a store front. It was specifically there to manage products that need to be shipped out."
Perry then asked the state legislature to make sure that it crafts some new rules that keep Amazon from leaving. Looks like Amazon just successfully called Texas' bluff.

Filed Under: taxes, texas
Companies: amazon


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  1. icon
    harbingerofdoom (profile), 14 Feb 2011 @ 10:00am

    Re:

    i think the difference is that there isnt a clear definition of what constitutes situations where sales tax can be collected. perry is saying that historically, its any company that has a store front property where you can go and buy products directly from them. since you cant just walk into their distribution facility and buy something from them directly, it does not fall under the rules for collecting sales tax.
    the legislation changes he is looking for is something that more clearly defines the entire issue... and he is right in that respect.

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