Tax trouble for the Queen of the Blues
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Amazonian sized state tax battles

I've ordered books and CDs from Amazon since it opened its virtual doors. In fact, I have a collection of goodies the site sent to patrons back in the high dot-com days of exuberant e-commerce, before such niceties were trumped by bottom-line considerations.

Amazon_logo_2 Even though I haven't gotten a thermal Amazon mug or nifty magnet in a while, and even though there are several very good record and book shops in Austin, I still use Amazon now and then.

It particularly appeals to me because I'm a buyer, not a shopper. I know what I want and I just want to purchase it and get out. Having the music or book delivered to my door is icing on the cake.

And the lack of sales tax is like a big scoop of ice cream to round out the online shopping dessert.

Or maybe I should say "was" like rather than "is" like. Apparently, Amazon has been stiffing our local treasury when it comes to sales taxes.

Amazon and Texas taxes: A 1992 U.S. Supreme Court ruling lets states collect sales taxes from out-of-state retailers that have a ''physical presence'' in their state. Seattle-based Amazon runs a distribution center in Irving.

That Dallas-area location was a revelation to the Texas Comptroller's office, which last earlier this month told the Dallas Morning News that state tax collectors didn't know Amazon operates a Texas facility. State officials have since begun looking into the matter.

Amazon says it's complying with Texas tax law because the center is operated by an Amazon subsidiary, Inc. Under state law, a subsidiary is not required to collect sales tax.

Well played, Amazon, well played.

I doubt, however, that Texas will let this stand for long. Like every other state in the United States, it's strapped for funds. And since my fellow residents won't tolerate an income tax (Yankee tax heresy!), we're going to aggressively go after every other tax penny we can.

If tax officials determine that the online bookseller is indeed operating under legal sales tax exempt status, I wouldn't be surprised to see this loophole changed when Lone Star lawmakers reconvene.

New York state of tax: Meanwhile, up in the Empire State, Amazon is fighting back against a newly-enacted law that requires the company to collect that state's sales taxes even though it has no physical presence in New York.

Amazon has filed a lawsuit asking the New York State Supreme Court to declare the law "invalid, illegal and unconstitutional." The online retailer says the law is too broad and calls it unconstitutional because legislators specifically targeted Amazon when crafting the statute. (Take note, Texans.)

It's unlikely there'll be any resolution, even temporary, in this matter before the June 1 collection deadline kicks in.

So New York customers, you might want to hang onto any sales receipts from online purchases after that date just in case you get a chance to get back sales tax you pay Amazon and other similar retailers.


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Good point about that use tax. Yes, NY and most states with sales taxes have this backup method to try to essentially collect sales tax from the consumer instead of the retailer.

But use taxes are hard to enforce, most people don't know about them and even if they do, they ignore them. So to get the money, it's better to make the business(es) collect sales tax and then remit it to the state. It also shifts the bad tax PR to the seller!


NYS has use tax on the state income tax since 2003.

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