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Amazon Fights Jungle-Sized Sales Tax

Company Uses Economic Might to Resist Millions in Taxes

If there’s any company in the U.S. that can be called bold when it comes to avoiding taxes, it may be Amazon.

The shopping website and company may not be a Wesley Snipes, but when various states passed laws levying online sales taxes, Amazon called them unconstitutional and counterproductive.

Even more, Amazon used its position as a major online economic powerhouse to show they were serious. When California passed an online sales tax, the company refused to pay it. It cut its ties with 10,000 business and individuals who refer business to Amazon.com and bankrolled a $5 million effort to pass a referendum overturning the tax.

When Texas officials determined Amazon’s Dallas-area warehouse qualified as a local address for sales tax rules, they sent the company a $269 million tax bill. In response, Amazon shut down the warehouse and cancelled plans to build another one in the state. A hearing with state tax officials was scheduled to settle the matter.

California had to negotiate with the online bazaar. In early September, state officials announced a deal where Amazon would delay collecting taxes until September 2012, two months after it was supposed to begin, and the company would drop its referendum effort. The federal government is set to take up the matter of online sales taxes around then, and whatever gets passed would trump state online sales taxes.

In all this, mom-and-pop small businesses are crying foul. Small brick and mortar businesses support an online sales tax to level the playing field. What Congress and state officials do – and how Amazon responds – should be an interesting series of events.

While Amazon strikes deals with California and Texas, we strike deals for those who owe back taxes to the IRS. If you have tax debt, a tax attorney is the person you’ll need to get your finances out of the jungle and back on safe ground.

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