State of Texas Assesses Amazon for $269 Million in Uncollected Sales Tax

The State of Texas has issued an assessment charging that Amazon.com owes the state some $269 million in uncollected sales tax, including interest and penalties, for the period from December 2005 to December 2009. Amazon.com reported the assessment in its September 30 quarterly filing with the SEC.

“We applaud the State of Texas for taking action against Amazon for its refusal to collect and remit sales tax despite its having clear nexus in the state,” said ABA CEO Oren Teicher, who noted that ABA has had repeated correspondence with Susan Combs, the Texas comptroller of public accounts, regarding Amazon’s skirting of the state’s sales tax laws. “In our letters, we stressed that Amazon.com has clear nexus in the state through its online affiliates and distribution facilities in the state. The state government should not be in the business of picking and choosing favorites. Our independent bookstores in the state follow the state sales tax laws – so should Amazon.com. Throughout this process, the state noted it was committed to resolving the issues we were raising, and we are pleased that it has decided to take action.”

In its SEC filing, under “Other Contingencies,” Amazon.com reported: “In September 2010, the State of Texas issued an assessment of $269 million for uncollected sales taxes for the period from December 2005 to December 2009, including interest and penalties. The State of Texas is alleging that we should have collected sales taxes on applicable sales transactions during those years. We believe that the State of Texas did not provide a sufficient basis for its assessment and that the assessment is without merit. We intend to vigorously defend ourselves in this matter.”

ABA has contacted the comptroller’s office numerous times regarding Amazon.com’s refusal to collect sales tax in the state, despite the online retailing giant having a facility in Irving, Texas. In a letter to Combs dated May 14, 2008, Teicher wrote: “It is indisputable that Amazon.com has a physical presence in the State of Texas. When a Texas-based customer buys a book from one of our Texas-based bookstore members either as an in-store or online purchase, our bookstore members follow existing Texas sales tax laws and collect and remit sales tax. We believe Amazon.com should do the same.”

Read a past article on this topic.
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