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Amazon leaving Texas in sales tax dispute

Post by John Gillie / The News Tribune on Feb. 14, 2011 at 3:08 pm with 2 Comments »
February 14, 2011 3:08 pm

Seattle’s has told Texas it will close its Irving, Texas distribution center and lay off 119 workers because the state is trying to collect $269 million in what Texas claims are back sales tax payments from the online retailer.

The sales tax collection effort and Amazon’s move to close its distribution center has ignited a political firestorm in supposedly business-friendly Texas. Gov. Rick Perry has publicly criticized the action of the state’s comptroller, Susan Combs, for sending Amazon the back tax bill.

Amazon contends it’s exempt from collecting sales taxes from customers because it operates on-line in interstate commerce. Texas contends that because the on-line retailer has a brick-and-mortar presence in Texas in the form of the distribution center, it should be subject to sales tax collection rules.

Perry said he will ask the legislature for specific legislation exempting Web merchants like Amazon from collecting sales tax.

Leave a comment Comments → 2
  1. Borders bookstore to file for bankruptcy.
    Jobs at stake: 19,000

    Amazon to close Irving,TX distribution center.
    Jobs lost: 119

    Does anyone connect the dots ?

    Borders, like bookstores everywhere, have been facing the sales tax headwind as a competitive handicap for years vs. Amazon.

  2. Like girlie man Schwarzenegger, Rick Perry, gov. of the “Don’t Mess” state is kowtowing to the bullying tactics of Amazon.

    The proper venue where this should be addressed is Washington, but in the present political climate anything labeled “Tax” will be regarded as Toxic for the political careers of our elected officials. Even if Washington were to resurrect the “Sales Tax Fairness and Simplification Act,” H.R. 3396 which died on the vine in the last congress, it only gives the force of law to states which enacted the “Streamlined Sales Tax Agreement” which 24 states have so far passed. But Texas hasn’t yet. So, state legislators should focus on this step first.

    Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.

    An outfit called Alliance for Main Street Fairness ( has been formed recently to lobby to end the present online sales tax loophole.

    As a tactic to bring the issue to a speedier resolution, I suggestions the following:
    For the major brick & mortar retailers who also have online operations, if they reorganize their online efforts copying the Amazon playbook of “Entity Isolation” to dodge the “Nexus” issue so they too can dodge the responsibility of collecting sales tax, the states will then face the specter of revenues drying up in a major way and this tactic will raise the political profile and urgency of this issue.

    This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:

    A dog is lying on the porch whining softly.
    A passerby asks the owner what is wrong with the dog.
    “thar’s a nail stickin’ up outta da porch tha’ he’s laying on.”
    “Why doesn’t he move?”
    “Donno. I reckon it don’ hurt bad enough.”

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