Amazon to close Texas distrubution center due to sales tax dispute with the state

http://news.yahoo.com/s/ap/20110210/ap_on_bi_ge/us_amazon_sales_tax_dispute

Online retail giant Amazon.com is closing a suburban Dallas distribution center and scrapping plans to expand Texas operations after a dispute with the state over millions of dollars in sales taxes.

If you are not familiar with the way sales taxes are collected with online purchases here is a short explanation. If a retailer has a physical presence in the state that the internet purchase is made, then they have to collect the sales tax from the buyer and turn it over to the state. If the buyer is in a state where the retailer doesn't have a physical presence then no sales tax is collected or paid.

What the article doesn't make clear is when this $269m that Texas wants is owed from. If Amazon hasn't paid taxes since they opened the distribution center there in 2005, then yes they owe and moving because the state wants the money is just away to hold the state hostage to get them to forgive the debt.

Now if Amazon has been collecting and paying State sales taxes since they opened the distribution center in 2005 and the Texas is going after them for money before that, then I don't blame them for leaving. Because if that is what the state is doing it amounts to extortion.

One of the things I hate about living in Texas. They charge sales tax not on only on the merchandise, but on the shipping charges! Bah.

Texas is very aggressive with all types of taxes. In the logistics industry, it's common for cargo to move from warehouse to warehouse across the country before it is sold and reaches its ultimate destination. Texas charges a tax on the value of the goods in warehouses in the state as of Jan 1 each year - unless the cargo is moved out of state within a certain number of days of Jan. 1. I think it's 30 days.

At the same time. If Texas has a state income tax, they would be double-dipping because they are getting a tax on the rent income collected by their in-state warehousing company.

So the goods don't even have to be sold in the state for them to be sticking their hand out and collecting a tax on it This comes back to bite them (or rather the warehousing companies in the state) because many companies avoid leaving cargo in Texas warehouses just to avoid this tax. I would bet the in-state warehousing companies have lost business because of their taxing practices.

So now Texas is going to lose the jobs created by the Amazon distribution center because they are probably trying to collect taxes on goods sold to people outside of Texas.