Amazon’s Texas Rumble

 

Gov. Rick Perry sides with company in $269 million tax dispute

By James Shannon

Business Journal

When the Dallas Morning News asked the Texas Comptroller’s Office in 2008 why retailer Amazon.com didn’t collect sales tax when it operates a distribution center in Irving, it prompted a state audit of Amazon’s operations.

Last August, Comptroller Susan Combs sent Amazon.com Inc. a bill for $269 million in uncollected sales tax on sales to Texas residents from December 2005 to December 2009. That action became public when Amazon disclosed it in a quarterly filing with the Securities and Exchange Commission in October.

Wrangling between the parties in the ensuing months proved fruitless. With the case pending before the State Office of Administrative Hearings, Amazon.com  decided to pull out of Texas and close its distribution center in Irving.

A total of 119 people stand to lose their jobs according to a letter the company sent to the Texas Workforce Commission. The notice from Amazon was required by the federal Worker Adjustment and Retraining Notification Act if an employment site shutdown will result in job loss for 50 or more employees during any 30-day period.

The notice came one day after Amazon vice-president Dave Clark’s e-mail to workers about the Irving center’s closing was obtained by the Associated Press. In that e-mail, Clark said 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.”

The tide in Amazon’s Texas rumble may be turning, however. Last week, Gov. Rick Perry told the Washington Examiner (a conservative D.C. weekly not connected with the Beaumont Examiner) that he disagreed with Comptroller Combs’ attempt to collect the disputed $269 million from Amazon.

"The comptroller made that decision independently. I would tell you from my perspective that's not the decision I would have made," said Perry.

His comments were not limited to criticizing Combs. Perrry said he would ask the Texas Legislature, currently in session, to enact a bill resolving the dispute in Amazon’s favor.

“Hopefully someone will be able to craft some legislation - and actually do it - before Amazon walks out the door. Texas should be a place a bastion for businesses not one where they're sitting there going 'we'd rather go over to go to Oklahoma where we get a better deal."

In fact, disputes over sales tax collections on Internet sales are not limited to Texas – or Amazon. According to a Wall Street Journal report, “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.”

Amazon has also been involved in battles regarding sales tax laws in states including New York, North Carolina and Colorado.

This article appears in the February edition of the Beaumont Business Journal