We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
Online retailers benefit from a tax loophole which allows for internet sellers to avoid collecting sales taxes from customers unless the company has a physical presence in their state. This has given companies like Amazon.com an unfair advantage over “bricks and mortar” stores and smaller, locally owned businesses all over America who must collect sales taxes from customers.
One place where Amazon.com certainly does have a physical presence is Texas. Recently, Texas asked Amazon.com to pay $269 million dollars in past due sales taxes. The company runs a distribution center in the state and, as the Texas Comptroller said, “If you have a physical business presence in the state of Texas, you owe sales tax.” Amazon refused to pay the bill, claiming a subsidiary owned the distribution center. Last week, news came that Amazon has decided to shut down the center because they were “unable to come to a resolution with the Texas comptroller’s office.” As the Dallas Morning News explained it, “Amazon.com has decided to take its ball and go home.”
Of course, the real answer to this problem is for Congress to end the loophole by allowing states to require sales tax collection from any company that sells to its residents.