The Amazon Tax – Part I

The Texas House of Representatives will consider SB 1 on Thursday. One provision in SB 1 is what is known as the “Amazon tax,” which attempts to change the law governing the Texas Sales and Use tax in a way to ensure that Amazon would have to collect sales tax on goods sold to Texans-at least those Texans currently residing in Texas. The Texas Legislature already passed an Amazon Tax this spring, but Gov. Rick Perry vetoed it.

Amazon currently doesn’t collect the sales tax. But last year, the Texas Comptroller decider that Amazon should be doing so. In its 3rd quarter 10 Q filed with the SEC last October, Amazon made the issue public:

In September 2010, the State of Texas issued an assessment of $269 million for uncollected sales taxes for the period from December 2005 to December 2009, including interest and penalties. The State of Texas is alleging that we should have collected sales taxes on applicable sales transactions during those years. We believe that the State of Texas did not provide a sufficient basis for its assessment and that the assessment is without merit. We intend to vigorously defend ourselves in this matter.

The Austin American-Statesman explains what has happened since:

Four months after Texas officials told Amazon.com Inc. that it owes $269 million in uncollected sales taxes, the online retail giant has filed a lawsuit demanding that the comptrollers office release the audit information it used in arriving at that amount. … Amazon asked the comptrollers office to explain its basis for the $269 million assessment, but “auditors were not forthcoming with an explanation,” the lawsuit claims. The comptrollers office has refused to provide the information, saying it was protected by attorney-client privilege because “the entire file relating to the audit was ‘prepared by and attorney,’ and thus … protected from disclosure,” according to the lawsuit. A Dec. 16 opinion issued by the Texas attorney generals office agreed with the comptrollers office that the documents were protected, according to the lawsuit.

-Bill Peacock