Update: Texas to look into requiring Amazon to collect sales tax

Computerworld - Texas officials are investigating whether Amazon.com Inc. should be collecting the state's 6.25% sales tax from its Texas customers.

The issue revolves around whether Amazon has a physical presence in the state. Under a 1992 U.S. Supreme Court ruling, if an Internet retailer doesn't have a brick-and-mortar operation in a state, it is not required to collect state taxes.

Amazon has a distribution center in Irving, Texas, although Amazon spokeswoman Patty Smith said the center is operated by an Amazon subsidiary, Amazon.com.kydc Inc. Under Texas law, a subsidiary is not required to collect sales tax, Smith said.

R.J. DeSilva, a spokesman for the Texas Comptroller's Office, concurred with that statement, saying his office launched the investigation to determine which entity owns the distribution center. If it concludes that Amazon.com Inc. owns the center, the state would then determine whether the company is responsible for remitting back taxes to the state.

A check of the online records of the Dallas Central Appraisal District indicates that Amazon.com DBA (doing business as) Amazon.com is the owner of the distribution center at 2700 Regent Blvd. in Irving. There is no mention of the Amazon.com.kydc Inc. subsidiary.

Smith said Amazon checked and Amazon.com.kydc Inc. signed the lease for the Irving facility. "The Dallas Central Appraisal District site is incorrect, and we're following up with them to have this corrected," Smith said.

Smith said Amazon collects and remits sales taxes in North Dakota, Washington, Kentucky, Kansas and, beginning June 1, in New York. "Each state has different rules and regulations regarding sales tax collection, and we comply with all state laws in these matters," Smith said in an e-mail.

Amazon has filed a lawsuit challenging a recently passed New York law requiring the online retailer to collect sales taxes on purchases New York customers make through Amazon's affiliates' programs. Amazon, however, contends that it has no physical presence in the state and should not have to comply with the law.

The Texas issue surfaced shortly after news of the New York law came to light, although DeSilva said Texas' decision to look into the Amazon matter was not specifically related to the news out of New York.

According to a July 1, 2005, article in The Dallas Morning News, Amazon.com officials said 80 to 100 people would be working in a distribution complex that was slated to open at 2700 Regent Blvd. in Irving by the third quarter of 2005.

"This is one of our non-automated fulfillment centers carrying our larger non-conveyable items," Smith, Amazon.com's spokeswoman, is quoted as saying in the story. That story did not say that the center would be operated by the Amazon.com.kydc Inc. subsidiary.