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 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. identicon
    Anonymous Coward, 14 Feb 2011 @ 10:14am

    As a small business in Texas...

    I operate a small internet retail site here in Texas and I can tell you what the currently written Texas tax code requires. If Amazon has any presence in the state (warehouse, distribution, etc) they have to collect Sales Tax on purchases made by Texas residents. All sales shipped to other states put the burden on tax collection on the buyer (Use Tax as opposed to Sales Tax) and buyer is suppose to report & pay that to their state (something no one ever does). This is how it is in the majority of states and how most large internet retailers operate (hence the 'Sales Tax applied in states X, Y, Z' you see on many retailers).

    Amazon is basically just throwing it's weight around in a bad economy and threatening jobs as a way to get out of paying taxes. Now I'm not saying that I think they should have to pay it, but that's the way the law is written and if the Governor wants to allow anyone without a storefront to avoid paying sales tax to Texas residents, fine by me, but focus on changing the law rather than throwing your Comptroller under the bus for attempting to apply the law correctly. If they do change the law it could be a good move for Texas in continuing to grow middle-class jobs as I could see many companies moving their distribution centers to a tax-friendly, centrally located state as a result.

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