It’s been a bit challenging trying to figure out where Amazon.com stands on the issue of collecting sales tax on items it sells in states where it doesn’t have operations. First, the Seattle online retailer, which has always collected sales tax in its home state of Washington and a handful of other states, adamantly opposed any government effort to force the online retailer to collect sales tax.
Then, about two years ago, the company changed course and started brokering deals with a host of states (Nevada, California, etc.) to start collecting sales tax.
Now, here comes the latest change. Amazon has filed legal documents to take a case to the U.S. Supreme, arguing that it doesn’t have to collect sales tax in New York because it doesn’t have significant operations there, reports The Wall Street Journal. The move has baffled some industry watchers.
The Journal reports:
What seems odd about the filing is that Amazon has brokered deals with a variety of states–or chosen not to fight–allowing sales tax collection there. Starting next month, for instance, Georgia and Virginia will begin requiring sales tax collection for Amazon merchandise and in just the past year, Amazon has begun collecting sales tax from residents in New Jersey, California, Texas and Pennsylvania.
And from The Verge:
The FT points out that online retailers were traditionally not required to collect sales tax in states where they don’t have a physical presence, but Amazon has been focusing on a more diffuse distribution network, with more local warehouses. It has also begun collecting sales tax in several states. Against that backdrop, the decision to go to court over tax collection in New York has many scratching their heads. “It is puzzling,” said Jason Brewer of the Retail Industry Leaders Association.
Does it matter that New York is the third most populous state in the country? Maybe. But then why did Amazon broker a deal with California? (The company’s hardware subsidiary, Lab126, does happen to be based in California).
But Amazon also has a growing presence in New York too, inking a deal to open a 40,000 square foot fashion studio in Brooklyn earlier this year. Its MyHabit.com unit also is based there, and the Journal notes that Amazon’s own Web site lists New York as one of it office locations. The company is currently hiring for roles in publishing, media, engineering and advertising in the office, according to a jobs page.
“Petitioners have no physical presence in New York—they do not own property there, do not maintain any New York offices, and do not employ New York personnel,” Amazon said in the filing.
As GeekWire guest contributor Angel Djambazov wrote back in February, the sales tax issue has been a legal and legislative “thorn in Amazon’s side for several years.” (See: Why Amazon and other retailers are supporting this national sales tax legislation)
There have been theories that Amazon loosened its stance on the sales tax issue in part because of plans to expand its Amazon Fresh and delivery capabilities to new areas, a business decision that started to take root in June when the company expanded the grocery delivery service from Seattle (where it had been tested fore five years) to southern California. Amazon also has a growing network of physical lockers which allows customers to pick up packages at participating retailers.
And then there’s Amazon’s growing network of fulfillment centers, which are sprouting with more regularity throughout the country.
The Financial Times reports that Amazon.com has hired the Washington D.C. law firm of Gibson Dunn & Crutcher. Ted Olson, a partner in the firm, is a former U.S. solicitor general who played a key role in securing a victory for George W. Bush in the Bush vs. Gore legal action following the 2000 election.
