Texas, Amazon Agree: Sales Tax Collection Begins July 1, 2012, Create 2,500 New Jobs

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

 AUSTIN, Texas—Online retailer Amazon.com Inc. (Amazon) will begin collecting and remitting Texas sales tax on July 1, 2012, and over the next four years create at least 2,500 jobs, making at least $200 million in capital investments in the state, under the terms of an agreement announced by Amazon and Texas Comptroller of Public Accounts, Susan Combs. [Tex. Comp. of Pub. Accts. News Release, “Texas, Amazon Announce Agreement to Create Jobs,” 4/27/12]

According to the news release, which is identified as a call for federal action on sales tax by the online retailer and Texas leadership, the agreement “resolves all sales tax issues between Texas and Amazon.” Comptroller spokesman R.J. DeSilva confirmed in an April 30 email that the agreement settled the audit efforts begun by the comptrollers office in 2010, which was aimed at the collection of $269 million in back taxes from Amazon. Amazon had sued to block the efforts.

Amazon spokesman Scott Stanzel said the company has not made any announcements about where those jobs and facilities will be located.

Congress Urged to Act

In thanking Amazon for “partnering with us to find a solution that works for our state,” Combs said the agreement “is an important step in leveling the playing field in Texas; however, Congress should enact federal legislation that will give states access to revenues that are already due, which would resolve this issue fairly for all retailers and all states.”

Paul Misener, Amazon Vice President of Global Public Policy, said “Amazon looks forward to creating thousands of new jobs in Texas and we appreciate Comptroller Combs working with us to advance federal legislation.” “We strongly support the creation of a simplified and equitable federal framework, because Congressional action will protect states' rights, level the playing field for all sellers, and give states like Texas the ability to obtain all the sales tax revenue that is already due,” he added.

Amazon is “interested in working with the state to join together in the advocacy of a federal bill on sales tax and ... to better serve our customers in the future,” Stanzel told Bloomberg BNA April 30.

The Alliance for Main Street Fairness, an advocacy group for retailers with “brick-and-mortar” stores, praised the deal, saying, “a level playing field has finally been established.” The organization also urged Congress to adopt a federal remedy.

A copy of the agreement between Texas and Amazon was not immediately available. However, Amazon included the bare bones details of the agreement in its quarterly 10-Q filing with the federal Securities and Exchange Commission (SEC).
While sales taxes are actually paid by the consumer and due to the state regardless of whether they are collected by the retailer, in practice the states receive their money from the sellers because it is impractical to collect from purchasers.

The news release is available on the internet at http://www.window.state.tx.us/news2012/120427-Amazon.html.

Amazon's most recent 10-Q filing with the SEC is available on the internet at http://www.sec.gov/Archives/edgar/data/1018724/000119312512187203/d316991d10q.htm.

The text of pending Congressional legislation, S. 1832 and H.R. 3179, which are aimed at the improvement and restoration of states' rights to enforce the collection of state and local sales and use taxes, is available on the internet at http://www.gpo.gov/fdsys/pkg/BILLS-112s1832is/pdf/BILLS-112s1832is.pdf; and http://www.gpo.gov/fdsys/pkg/BILLS-112hr3179ih/pdf/BILLS-112hr3179ih.pdf, respectively.

By Nancy J. Moore and Christine Boeckel