Seattle’s Amazon.com 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.