Amazon.com has reached a settlement in one of its largest and longest-running state tax disputes, striking a deal with the Texas comptroller to resolve the state’s claims that the company owed some $269 million in back taxes in the state.
Under the deal, Amazon will start collecting taxes on online sales in the state on July 1. The company also committed to create at least 2,500 jobs and make at least $200 million in capital investment in the state over the next four years.
Amazon disclosed the settlement in its quarterly filing with the SEC this morning.
“While we continue to believe the assessment was without merit, in April 2012, we entered into a settlement with the State of Texas that included an agreement to collect sales taxes on applicable sales transactions for our US-focused internet retailers beginning July 1, 2012, resolution of Texas sales taxes up to that date, certain commitments related to capital investment and job creation in the state, and an immaterial payment to the state.”
Amazon previously promised to create as many as 6,000 jobs in Texas and invest $300 million over three years, according to the Austin-American Statesman, which reported on negotiations between the state and Amazon earlier this week. But in exchange for those commitments, the company had sought an exemption from collecting taxes on online sales in the state for more than four years.
Traditional retailers say Amazon has an unfair advantage when it’s not required to collect sales tax. The company has long contended that distribution centers such as the one it operated in Texas don’t constitute enough of a physical presence to require it to collect taxes on online sales. Amazon is calling for a uniform federal law to address the issue.
It’s the latest in a series of developments on the issue around the country. Earlier this week, Amazon agreed to collect taxes in Arizona starting in 2014. Meanwhile, in Illinois, a judge struck down a law that imposed a tax online retailers based on the presence of affiliates in the state. In California, Amazon agreed to start collecting sales tax next year.
Here’s the joint news release issued this morning by Amazon and the Texas comptroller …
Texas, Amazon Announce Agreement to Create Jobs
Online Retailer and Texas Leadership Call for Federal Action on Sales Tax
(AUSTIN, TX and SEATTLE, WA) — Texas Comptroller of Public Accounts Susan Combs and Amazon.com, Inc. today announced an agreement that will lead to the creation of thousands of new jobs in Texas by the online retailer.
According to the agreement between the Comptroller of Public Accounts and Amazon, the Company plans over the next four years to create at least 2,500 jobs and make at least $200 million in capital investments in the state and will begin to collect and remit Texas sales tax on July 1, 2012. The agreement resolves all sales tax issues between Texas and Amazon.
“We thank Amazon for partnering with us to find a solution that works for our state,” said Combs. “This is an important step in leveling the playing field in Texas; however, Congress should enact federal legislation that will give states access to revenues that are already due, which would resolve this issue fairly for all retailers and all states.”
“Amazon looks forward to creating thousands of new jobs in Texas and we appreciate Comptroller Combs working with us to advance federal legislation,” said Amazon Vice President of Global Public Policy Paul Misener. “We strongly support the creation of a simplified and equitable federal framework, because Congressional action will protect states’ rights, level the playing field for all sellers, and give states like Texas the ability to obtain all the sales tax revenue that is already due.”