Texas realizes Amazon is in Texas
Online Tax Squabble Part Deux
Texas may soon follow in the footsteps of those clever New Yorkers, asking Amazon for some serious sales tax dollars. Or maybe not.
Currently, Amazon does not collect sales tax on goods shipped to the Lone Star State. But as reported by The Dallas Morning News, the Texas comptroller is considering whether this situation needs changing. The state may even ask the mega e-tailer for millions of dollars in back taxes.
A 1992 Supreme Court decision says that American e-tailers are required to collect sales tax if they have a "physical presence" in the state where a customer resides. And according to company spokeswoman Patty Smith, Amazon does indeed have a physical presence in Texas - and it has for at least seven years.
"One of subsidiaries opened a fulfillment center in Irving, Texas in 2006," she told us. "And we've had other operations in Texas since 2000."
According to The Dallas Morning News, the Texas comptroller was unaware of this. "In conversations with Amazon, they told me they don't have a distribution center in Texas," Robin Corrigan, of the comptroller's office, told the paper.
Corrigan did not return our calls. But Amazon's Patty Smith points out that the company has filed numerous tax documents with the state, covering everything from business licenses to employment taxes. And comptroller spokesman R.J. DeSilva gave us a more diplomatic version of Corrigan's comments to The News, saying that, to date, Texas has not classified Amazon as "being engaged in business" within its borders.
But he confirms that this position is not set in stone. "We have a business activity research team that analyzes what business are setup in the state on an on-going basis," DeSilva explains. "For the purpose of sales tax collection, we don't identify Amazon as being engaged in business in Texas. But that could change. Or it could not."
And, yes, the state may decide that Amazon owes taxes from the past. "If it's determined they've been engaged in business for a certain number of past years, it's possible they could be assessed that tax liability."
Last month, New York rolled out a new budget that included a so-called "Amazon Tax," claiming an e-tailer's affiliate marketers qualify as a physical presence. But Amazon disagrees. And it recently slapped a lawsuit on the Empire State.
If an e-tailer doesn't collect state sales tax, then buyers must pay the state on their own. But no one ever does that. At least, no one we've ever met. ®
Tax rates here and there, and "the system"
What fun! In my part of California, it is 8.25% (its a county thing!). If I have a really big ticket item, I just have it sent to my sister's place in Oregon where the rate is a very low 0.0%. California has various rates depending upon the locality. Oh, and there are other catches. A few hours ago, I bought a nice HOT roast beef sandwich. Tax charges. If I had asked it to be cold (as well as take-out/to go), no tax. Go figure. The rule is that if it is "hot edible" its taxable. If it is "cold, edible, take-out" there is no tax. All of this is to make sure that restaurants (especially fast food joints) charge tax, even on take-out orders. If they charged for "cold, edible, take-out" then they would also need to charge tax for groceries which isn't too attractive.
Fortunately, Amazon doesn't sell food that I know of.
Amazon does ship from Texas
Just checked the Amazon order I placed on Friday.
From the shipment tracking page:
May 11, 2008 --- DALLAS TX US Departure Scan
May 11, 2008 --- US Carrier notified to pick up package
Should be a nice big whopping tax bill when China buys
the good ol' US of A.
Lock, stock and barrel.