Business
3:42 pm
Wed October 27, 2010

Texas After $269 Million from Amazon

Amazon, the world’s largest online retailer, was recently slapped with a $269 million sales tax bill by Texas. The $269 million figure comes from the amount the state claims the company owes from back-taxes since December four years ago, plus interest and penalties.

Texas says Amazon owes them the money as the company has a distribution center in Irving, Texas. Having a physical presence in a state is usually the litmus test for whether a company is obligated to pay the state sales tax. But, as The Seattle Times reports, Amazon is fighting back:

Amazon said it will "vigorously" defend itself against the claim. The company has a warehouse in Texas "that is an affiliate, but not subsidiary, of the Amazon retailing entity," spokeswoman Mary Osako said in a statement.

Allen Spelce, spokesman for the Texas Comptroller of Public Accounts, said the state stands by its tax assessment.

"We feel like Amazon is no different than the mom-and-pop store on the corner. If you do business in the state of Texas, you should be required to pay sales tax, along with all the other businesses in the state," Spelce said.

Texas relies on these taxes more than most states as it does not have a personal income tax. That's especially true now as the state is facing a potential budget shortfall of $25 billion. As many online businesses do not have a physical presence in Texas, the state loses a considerable amount of revenue, as San Antonio's KENS-5 is reporting:

Spelce said for the state Texas, with its budget shortfalls, internet sales tax is money worth going after.

“We estimate that we’re losing about 600 million dollars a year in internet sales tax,” he said.

Other states are currently in litigation with Amazon to recoup sales tax loses, with varying degrees of success. North Carolina, for instance, found its request for its residents’ order forms (in hopes of properly charging them sales tax) denied, as the ACLU helped the online-realtor prove the request unconstitutional as the government is not allowed access to know what books or media its residents have purchased.