Quote:
Originally Posted by HarryT
Given, though, that they do charge sales tax to some people already, I honestly don't see how it would cost them anything. As far as they're concerned, it's probably no more than setting some flag in a database somewhere.
Am I right in thinking that the "rule" is that they have to charge sales tax if they have a physical presence in a state? If that's so, and they have an office somewhere in Texas, it seems pretty unambiguous that they would then need to charge sales tax in Texas. Where's the "loophole" that allows them not to do so?
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Yes, that's the rule.
The issue in TX is that the distribution center is a different legal entity from Amazon.com-the-retailer. And that under US law (which does vary from state to state), the fact that a retailer owns a distribution center (or any other company, for that matter) is not usually considered to create a nexus in the state.
So under the law as it seemed to exist at the time Amazon opened the distribution center, it was not obligated to collect sales tax on its sales in TX.
But according to an administrative panel in TX, this is not the case...and Amazon is liable not just to collect taxes in the future, but to pay for all of the taxes it should have collected over the past 5 years.
So that's why they're disgruntled.
Note that this hasn't gone to an actual court yet, so the actual ruling could change -but that's where it is now.