Texas Investigating Amazon Over Taxes

    May 9, 2008

Amazon.com may soon have to pay the state of Texas back taxes with penalties and interest after the state learned the online retailer had a distribution center in Irving.

The Texas Comptroller’s Office is investigating if Amazon owes Texas possibly millions of dollars in uncollected sales taxes on purchases made by its customers in the state.

The state’s tax-collecting agency was not aware that Amazon was operating a facility there until this week when The Dallas Morning News inquired about why the company was not charging customers sales taxes.

In 2006, Texas lost around $541 million in state sales taxes on the Internet and mail-order sales, Comptroller Susan Combs told TDMN.

Robin Corrigan, the comptroller’s team leader for sales tax policy said in several meetings with Amazon officials they spoke about their compliance in states where they have a distribution center. "In conversations with Amazon, they told me they don’t have a distribution center in Texas," Ms. Corrigan said.

If it’s determined that they are subject to sales taxes, then they can be held liable for taxes, penalties and interest," she said. Texas by law can seek up to four years worth of back taxes.

Amazon is challenging a recently passed New York law that requires the company to collect sales taxes on purchases customers make through Amazon’s associates programs. Amazon is defending itself by arguing it has no physical presence in the state.