Amazon Closing Irving Center Amid Tax Dispute

AUSTIN (AP) – Online retail giant is closing an Irving distribution center and scrapping plans to expand Texas operations after a dispute with the state over millions of dollars in sales taxes, an executive informed employees Thursday in an e-mail obtained by The Associated Press.

Dave Clark, Amazon’s vice president of operations, writes in the e-mail that the center will close April 12 due to Texas’ “unfavorable regulatory climate.” It was not immediately clear how many employees work at the facility.

The Texas comptroller’s office last year demanded $269 million in uncollected sales taxes from Amazon. The company subsequently filed a lawsuit against the state, demanding it produce the audit that generated the figure.

The state contends is responsible for sales taxes not collected on online sales in Texas.

“We regret losing any business in Texas, but our position hasn’t changed: If you have a presence in the state of Texas you are required to pay sales tax, just like any other business that has a presence in Texas,” said Allen Spelce, a spokesman for Texas Comptroller Susan Combs.

Spelce said Texas loses an estimated $600 million in Internet sales taxes every year.

Amazon has been the target of numerous lawsuits filed by states seeking sales taxes on online purchases made from within their borders.

Clark said in his e-mail that the company also is scrapping plans “to build additional facilities and expand in Texas, bringing more than 1,000 new jobs and tens of millions of investment dollars to the state.”

Texas employees who are willing to relocate will be offered positions in other states, Clark said.

The Irving distribution center, known as a fulfillment center, opened in 2005.

During Amazon’s fourth-quarter earnings conference call last month, CFO Tom Szkutak said company had 52 fulfillment centers after adding 13 in 2010.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)


One Comment

  1. Taxes should be free says:

    Why should they have to pay taxes. It is not like a customer can walk into their store like Best Buy and pay tax. This is the best part about Amazon… along with free shipping.

  2. HMishkoff says:

    Why should they have to have a store to pay taxes? If they have a presence in Texas and they ship a product to an address in Texas, they should collect and pay sales tax, like everybody else does.

  3. Lauren D. says:

    Amen to that! Sales tax is ridiculous! People can complain all they want about the “income tax” they file for at the end of the year, but that seems a pittance compared to how you are robbed in various forms of state and local taxes, surcharges, sales tax, property taxes, commerce taxes, regulatory fees, etc. We are taxed out the @$$ but not not really because of the Federal government. Plus, both sides of the transaction are charged with sales tax, thus resulting in double taxation. I don’t even understand why I should be liable to PAY to pay money to someone else! I’m not making a cent from that transaction! It’s not my problem.

    If they start to attack the internet, the one place where there still seems to be some degree of consumer and merchant freedom, this new avenue of commerce will suffer. But that’s probably what the traditionalists want, isn’t it?

    I LIVE in the DFW Texas area and I am delighted to have an Amazon distribution center close by, but if this is what it takes to prove a point then I’ll support Amazon. They provide a valuable service to all of us.

    1. William Lyons says:

      The government actually has a constitutional right to levy taxes on goods. It does not however, have the right to tax the income I need to put food on my families table. Having said that, I don’t see how the Comptroller can possibly justify levying a sales tax on a DISTRIBUTION CENTER. As is evidenced by the name, all they do is distribute.

  4. DH says:

    Hey Perry, are you going to back up any of your campaign promises about making Texas a business destination?

  5. Robert says:

    There is that sucking sound again……away goes more jobs both at amazon and at the shipping company. Great Job…..

  6. Goodridance says:

    Pay your taxes Amazon or get out of the state. You knew the rules when you opened this facility and I’ll bet the City of Irving gave you a great big TAX break to open your facility in Irving. You want a Win Win situation but it’s not going to happen in Texas, get moving >>>>>>>>>>>>>>>>>>

  7. mcdlb says:

    Internet sales have long been watched by all states. States are losing millions of dollars because many people shop on the internet. In the past no one charged sales tax on internet sales. There was a nationwide moratorium on collecting sales taxes from internet sellers. I believe now the moratorium is over and states will be going after any facility that has a presence in their state. Some vendors now collect sales taxes on internet sales if they have a presence in the state. Just think: if you went into a store in your state or any other state IN PERSON, you would be charged sales tax. It works the same way. I think the states have to crack down. Sales tax is a big part of the revenue the state needs to balance their budgets.

  8. mcdlb says:

    To Lauren D: both sides are not charged sales taxes. The customer is charged the sales tax and the seller remits that tax to the state. What happened here is that Amazon was audited for a certain period and the state is billing for sales taxes that Amazon’s customers should have paid sales taxes. Amazon can, in turn, bill each customer the sales tax they owe…but good luck collecting it from customers.

    To William Lyons: this sales tax SHOULD have been charged on all back sales that Amazon made to customers. It is a CONSUMER TAX. Amazon did not collect, the State of Texas is billing them for what the customer should have paid. (see my comment to Lauren D)

    To DH: Perry is trying to get businesses in Texas. Read my comments

  9. Ronnie says:

    I still do not understand why Amazon refuses to pay taxes in Texas..All business have to pay taxes like anyone else.

  10. Lee says:

    “Open for business.”

  11. Donna says:

    Amazon has a right to see the results of the audit that came up with the sales tax due. I think Amazon would pay the sales tax. Online sales can be tricky. If a product is bought wholesale in TX, sold in TX, to a resident of TX, sales tax are due.

  12. krk_krk says:

    It is a wasted effort to correct the inequity of our antiquated sales tax system through state level legislation and predictably it has been frustrated using the courts & through intimidation of threats of job losses.

    The proper venue where this should be addressed is Washington, but in the present political climate anything labeled “Tax” will be regarded as Toxic for the political careers of our elected officials. Even if Washington were to resurrect the “Sales Tax Fairness and Simplification Act,” H.R. 3396 which died on the vine in the last congress, it only gives the force of law only to states which enacted the “Streamlined Sales Tax Agreement” which 24 states have so far passed. But Texas hasn’t yet. So, state legislators should focus on this step first.

    Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts.

    As a tactic to bring the issue to a speedier resolution, I suggest the following:
    For the major brick & mortar retailers who also have online operations, if they reorganize their online efforts copying the Amazon playbook of “Entity Isolation” to dodge the “Nexus” issue so they too can dodge the responsibility of collecting sales tax, the states will then face the specter of revenues drying up in a major way and this tactic will raise the political profile and urgency of this issue.

    In contrast to this aggressive unethical tactics by Amazon, I was surprised to learn that the much vilified WalMart collects sales tax on online sales even to states where it does not have a physical presence.

    This joke illustrates the pathetic lack of urgency by the states & the brick & mortar victims:

    A dog is lying on the porch whining softly.
    A passerby asks the owner what is wrong with the dog.
    “thar’s a nail stickin’ up outta da porch tha’ he’s laying on.”
    “Why doesn’t he move?”
    “Donno. I reckon it don’ hurt bad enough.”

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