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Amazon.com Must Start Collecting Taxes on Texas Sales in July

Where do you shop? Depending on where you live in Texas or elsewhere in the nation, you could drive in traffic, have trouble parking, arrive at a crowded store, look for the item you want to buy -- and still leave the store empty handed. Another option would be for you to shop online while in your pajamas at your computer and have the item delivered to your front door.

The question before the shoppers in Texas is whether they will continue to shop at Amazon.com after July 1 when a sales tax law settlement goes into effect.

According to news sources, Amazon.com has not been collecting sales taxes for purchases made in Texas. Reportedly, Texas has one of the highest sales taxes in the nation at 8.5 percent in some areas of the state, and Amazon.com has not been charging, or collecting, the sales tax.

In this case, Texas state law says that an online retailer must collect sales tax if the retailer has a physical presence in the state. Amazon.com has a distribution center in Irving. When the state comptroller sent a bill of $269 million to Amazon.com for past-due taxes, Amazon.com answered by closing the Irving distribution center.

News sources did not mention how many Texas workers lost their jobs, or whether the distribution center has since re-opened.

Apparently, the state comptroller continued to apply pressure because the state reached a settlement of some type with the retailer. Any financial payments were not disclosed, however, Amazon.com has agreed to begin adding the sales tax to purchases made in Texas as of July 1.

The retailer is lobbying Congress for some type of law to cover sales tax and other nationwide online retail matters. Currently, the retailer has a collection of state-by-state tax laws with which they must deal. They'd apparently prefer the system to be simpler.

As simple as buying a book in one's pajamas?

Our next post will be part three in our series discussing Texas' Fresh Start amensty program.

Source: Amarillo News, "Texas buyers to pay taxes on Amazon purchases," Karen Smith Welch, April 30, 2012

2 Comments

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