Amazon sues state of Texas

[sonias]

AAS Business blog 1/19/11
Amazon sues state, seeks info that led to $269 million sales tax bill

Four months after Texas officials told Amazon.com Inc. that it owes $269 million in uncollected sales taxes, the online retail giant has filed a lawsuit that demands the Texas comptroller’s office release the audit information it used in arriving at that amount.

The lawsuit, filed Jan. 14 in Travis County District Court, argues that the documents must be made public under the Texas Public Information Act and seeks a court order forcing their release. The suit also seeks recovery of attorneys’ fees and other legal costs.

Amazon and three of its subsidiaries — Amazon.com LLC, Amazon.com.kydc and Amazon Corporate LLC — say they sent letters this past September and October to the Texas comptroller’s office requesting “information related to the audit and the assessment.”

The comptroller’s office has refused to provide the information, saying it was protected from release, according to the lawsuit. A Dec. 16 opinion issued by the Texas attorney general’s office agreed with the comptroller’s office that the documents were protected by attorney-client privilege.

Oops - another "source" the Rs were looking to use in plugging their huge budget hole, is throwing a wrench in the process.

:popcorn:

[sonias]

1. Amazon says it will close Texas distribution center

Statesman Business blog 2/10/11

Amazon says it will close Texas distribution center

Online retail giant Amazon.com will close its suburban Dallas distribution center amid a dispute with the state over millions in state sales taxes, the Associated Press reported Thursday.

The Associated Press obtained an e-mail Thursday sent to Amazon employees by Dave Clark, the company’s vice president of operations. Clark writes that the center in Irving will close April 12 due to Texas’ “unfavorable regulatory climate.” It was not immediately clear how many employees work at the facility.

In his e-mail to staffers, Clark said that Amazon also is scrapping plans “to build additional facilities and expand in Texas, bringing more than 1,000 new jobs and tens of millions of investment dollars to the state.”

Texas employees who are willing to relocate will be offered positions in other states, Clark said. The Irving distribution center, known as a fulfillment center, opened in 2005.

:popcorn:

[TxVietVet]

2. Good Hair and his conservanazi buddies are going to screw someone.

I heard a local state representative (Liberty County) on a local radio station about the economic downfall Texas is in. As far as I can tell, they are setting up Medicade as the next item to kill. This repug rep was stating that most of the problem was people from outside Texas coming here because they could get Medicade and that has drove the costs up and is a huge part of the budget shortfall.

The repugs are looking to screw the poor and have NO intentions of ever helping working folks. If they have there way, the poor are going to bear most of the load.

It's sad. Texas wasn't have bad when I left twenty years ago. Now, I'm retired I don't have to worry much about the union construction work and it's ups and downs.

Oh well, I didn't vote for them. However, the next election, I will be certain to not vote for them.

[sonias]

5. Welcome back to Texas TxVietVet!

:hi:

We were actually in an upswing with a real possibility of turning Texas blue in 2010, and then the Tea Party picked up corporate sponsorship from Faux News and Glenn Beck and the rest as they say is history. The nuts turned out in droves and we're all going to pay dearly. This next legislative session is going to set Texas back decades the way things seem to be shaping up.

Yes the cuts are going to be massive - to the safety net, to public education and any kind of medical program. Things the Rs hate with a vengeance.

Really sad for us to have to live through it. So buddy up we're going to need everyone to just live here. :grouphug:

[The Philosopher]

3. Is sales tax

secured for online sales? I always thought that online purchases were free from the tax.

I'm glad Amazon is acting like jerks by taking jobs away from Texans in order to protect 269 million dollars. But I guess they won't want to set a precedent where they have to pay state sales taxes.

[sonias]

4. Online sales are taxable if generated in the state

I think that's the essence of the dispute. Since Amazon was filling orders in Texas, the Comptroller classified any fulfilled order as a sale in Texas. Who knows what was actually going on in the warehouse. Maybe they were handling the whole South in the distribution center.

Either way that's another 1,000 jobs out the door.

[Honeycombe8]

6. The online retailer has to pay sales tax, and charge its customers, if it has a presence

in that state. I THINK the presence has to be that they have a brick and mortar location where they retail in that state.

Amazon had a distribution center, it looks like. If it wasn't a retail outlet, I guess that's the crux of the disagreement. So I don't know what the law says about that. I would've thought that a big outfit like Amazon would've gotten some sort of guarantee about that before setting up shop in TX.

[sonias]

8. Brick and mortar location as opposed to actual retail

I agree that seems to be the disagreement - whether a presence (brick and mortar) qualifies for the definition of retail sales. Amazon is smart. You know they looked at skirting costs and taxes anyway they knew how. I'm sure their corporate lawyers set them up to wiggle themselves out of having to collect sales tax by the barest of fine line definitions.

I think it's Amazon's position that the sales were being generated by a different company (their on-line store located out of state) and that the distribution centers were simple shipping locations no different than a UPS like operation. Plus the distribution centers were owned by a different subsidiary or company.

Note how Amazon officials call the location a fulfillment center and how they avoid the use of physical presence in the WSJ article:

"Despite much hard work and the support of other Texas officials, we've been unable to come to a resolution with the Texas Comptroller's office," Clark wrote in the email. "Closing this fulfillment center is clearly not our preferred outcome."

Wallstreet Journal 2/10/11
Amazon To Close Distribution Center In Texas After Tax Dispute

(snip)
Amazon.com's decision comes as more states consider collecting taxes on Internet transactions. Critics of the status quo argue Amazon.com and other Internet retailers enjoy a significant advantage over brick-and-mortar competitors, which collect sales taxes. It also comes as many states wrestle with large budget deficits and look for new sources of revenue.

Consumers are supposed to pay tax for purchases made online, but state governments have no way to enforce those taxes. States cannot require out-of-state retailers to collect taxes if those companies have no physical presence in the state.

An Amazon.com spokeswoman did not immediately respond to a request for comment on whether the company considered that the Dallas distribution facility constituted a physical presence.

This argument will play out in the courts for a long time. Texas is not going to see a dime of that money any time soon if ever.

:kick:

[TxVietVet]

7. So much for the claim about CREATING JOBS.

Didn't take them long to screw that one up. Amazon will just set up shop in a state that will give them tax incentives to move to . Then, the game starts all over again. :spank:

[sonias]

9. Rick Perry: Amazon decision wasn't the right one

http://washingtonexaminer.com/blogs/beltway-confidential/2011/02/rick-perry-amazon-decision-wasnt-right-one#ixzz1DkoFw0wt">Washington Examiner 2/11/11
Rick Perry: Amazon decision wasn't the right one

Gov. Rick Perry, R-Texas, told The Examiner in an exclusive interview that Amazon's decision to leave the state was a result of a wrong decision by the state comptroller, and that he will work with legislators to make sure Amazon can stay.

"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."

Amazon announced that it would close its Texas distribution center, citing "an unfavorable regulatory climate" due to the comptroller's attempts to collect sales taxes. Perry noted that the Amazon distribution center was a warehouse without a storefront. "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."

Oh oh, Susan Combs is making Perry look bad nationally, after he's been bragging about creating thousands of jobs in Texas because of Texas' lax regulation for business.

You know Amazon is going to pick up on this pronto in their lawsuit. Win for Amazon!!

:rofl::rofl::rofl:

[MicaelS]

10. Sorry, as a Texan, I side with Texas

On this issue, and I shop from Amazon all the time. Texans refuse to tolerate having a state income tax. Therefore much of the state budget comes from sales taxes. No sales taxes, no revenue to the state and thus no services. Since more and more purchases are online, what is supposed to happen for cities and states to generate revenue if there is no online taxation?

People hate income taxes, they hate property taxes, they want to cut taxes on businesses to bring in, or keep jobs, they do not want to pay taxes for online purchases. So then the question is, just where is the money for government to be able to do it job going to come from?

[sonias]

11. I'm with Texas on this one too

I agree with you that since we rely so heavily on sales tax to fund our government services we should make sure it gets collected.

I shop on Amazon all the time too. At least once a month.

However it needs to be made very clear to businesses they attract to the "lax business regulation" that is Texas, that the business is on the hook for collecting taxes from day 1.

Amazon is fighting other states too. It's not just Texas.

But you see the infighting going on in their own party about how to frame this debate. Perry is obviously running for President and he doesn't want Amazon to make him look bad.

:shrug:

[tammywammy]

12. I agree to a point

I don't think just having a distribution center means they should pay sales tax, unless the law is changed to definitely include that. If I shop at Target online of course I pay sales tax, since I could have driven my lazy butt over to Target. But with Amazon it's different, I couldn't drive to Irving and pick out what I wanted.

I see Amazon's point of view. If Texas wants to collect sales tax on Amazon orders, then they need to change the sales tax law to include online only stores. Also, I never could figure out if Texas is saying every order sent out from the Irving location should be taxed. If the Irving location is fulfilling an order for Louisiana then why should Texas get that sales tax? Shouldn't that sales tax go to Louisiana?

It's a stick situation overall. And of course Perry's going to say he had no idea, because it shows 1000 jobs leaving the state, the one he touts as so pro-business.

edited to add: It's really messed up that the state wants them to pay based on an audit that they won't show. If I was Amazon I'd sue to, there's no way I'd pay a tax bill without actually seeing what it's based on.

[sonias]

13. Ask and you shall receive

AAS 2/15/11
Despite Perry's criticism, comptroller's office doesn't back down in Amazon sales tax fight
State Rep. Elliott Naishtat, D-Austin, files bill he says will close sales tax loopholes for online retailers.
(snip)
On Monday, state Rep. Elliott Naishtat, D-Austin, filed a measure he said would close loopholes in the Texas tax code that have allowed some retailers like Amazon to avoid collecting sales tax on Internet purchases.

House Bill 1317 defines a taxable retailer as one that brings in at least $10,000 a year in Texas or has an agreement with a Texas resident "for directly or indirectly referring potential customers to the retailer."

The bill "is modeled after laws that have been passed in other states to make it a clear connection between companies doing business in those states and having to collect sales tax," Naishtat said. "This bill will generate hundreds of millions of dollars for Texas. I would be surprised if Gov. Perry has a problem with this."

There ya go. Now all the Rs should step up and support Rep. Elliott Naishtat's bill and close that loophole.

And as for Amazon, they would know what the rule was - clear as a bell. Right? :shrug:

And I totally agree with you on the secrecy of the audit. :wtf:

How can the comptroller ask someone to pay something just on her word? What is secret about the result of the audit. Every taxpayer should have the right to see how the sales tax bill due was calculated. I've never heard of such crazy bullshit - but hey this is Texas where we grow Texas sized crazy. :crazy:

[tammywammy]

14. LOL

Republicans supporting a tax loophole closure. :rofl:

Hey and wouldn't Perry definitely have an issue with this, it's clearly a "new" tax and he promised no new taxes.

The really strange thing is that the comptroller denied access to the audit and the AG said that was okay. Way messed up.

In the end, Amazon's still going to shut down and Texas still isn't going to get the money from them.

[sonias]

15. Lawmakers ask Combs to explain Amazon assessment

AAS 2/15/11
Lawmakers ask Combs to explain Amazon assessment

Three state lawmakers are calling on Texas Comptroller Susan Combs to explain how her office arrived at the assessment it levied last year against Amazon.com for uncollected sales taxes.

The letter — sent Tuesday by state Reps. Pete Gallego, D-Alpine, Joaquin Castro, D-San Antonio, and Jessica Farrar, D-Houston — asks for a meeting this week with Combs.

Last year, Combs sent Amazon a notice that it is responsible for $269 million in sales tax. Amazon has disputed that assessment.

In their letter, Gallego, Castro and Farrar say it is “fundamentally unfair” to tell Amazon it owes millions in uncollected sales taxes without explaining how the state arrived at that figure. “Texans have never accepted ‘taxation without representation,’ not should they accept ‘taxation without explanation’…” the letter says.

There's a great reader comment after the story too:

Amazon wouldn’t have had this problem if they had remembered to give a kickback to to the Governor Perry

:rofl: Sad but true. maybe they needed to kick some money to Susan Combs too. That's how it works in Texas. You buy your legislators in advance.

:kick:

[sonias]

16. Texas House bills take sides in Amazon fight

AAS 3/10/11
Texas House bills take sides in Amazon fight

The Texas House has drawn its battle lines in the state's dispute with Amazon.com Inc. over sales tax revenue, with lawmakers filing bills that take opposite positions on the issue.

House Bill 2719, which state Rep. Linda Harper-Brown, R-Irving, filed Wednesday, would amend the state tax code to say that a company can't be classified as a retailer required to collect sales tax if it, or a subsidiary, operates or uses "only a fulfillment center ... or a computer server" in Texas.

(snip)

Harper-Brown's bill is at odds with House Bill 2403, which Rep. John Otto, R-Dayton, filed Monday to amend the tax code to define a retailer as a company that has in Texas "a distribution center ... or any other physical presence where business is conducted." Otto said he has talked with Sens. Steve Ogden, R-Bryan, and Tommy Williams, R-The Woodlands, about drafting a companion bill. It was unclear Wednesday whether Harper-Brown's bill had a sponsor in the Senate.

(snip)

Legislators will now have to decide whether to stand with Comptroller Susan Combs, who has said Amazon must collect tax on online sales in the state, or with Gov. Rick Perry, who has criticized Combs for pursuing Amazon. Combs has said Amazon is required to collect sales taxes on Texas transactions because of the distribution center.

:popcorn: