Beginning in July, tax agencies in Texas will begin to collect tax revenues on sales made by the online retailer Amazon.com, meaning the tax will be passed on to Texans who order books and other merchandise on the company’s website. Texas-based online retailers should be prepared to face tax bills from the state if they have not been collecting sales taxes.
The agreement ends a two-year battle between the state and Amazon over the issue. Amazon, which reported $48.1 billion in sales in 2011, traditionally has been opposed to collecting sales taxes from its customers. Texas officials, who want the revenue, and store owners, who said they can’t compete with online retailers who do not assess a sales tax, want the taxes collected.
The state had sent Amazon a bill in 2010 for $269 million, the amount Texas officials said Amazon owed in sales taxes from 2005 to 2009.
Under the agreement, Amazon has agreed to bring 2,500 jobs and $200 million in investments to the state and to start collecting taxes on sales made in Texas on July 1. In exchange, the state has agreed to resolve its dispute with Amazon over the $269 million bill.
Under increasing pressure from states, Amazon has started to craft agreements with states to collect taxes. While the tax collection will start soon in Texas, Amazon has successfully delayed the collection of taxes in other states. In Nevada, for example, Amazon will not collect taxes until 2014.
Texas brick-and-mortar retailers have urged state officials to begin collecting taxes from Amazon and other online retailers as soon as possible to make the traditional stores more competitive.
Source: Austin American-Statesman, “Amazon agrees to collect sales tax in Texas starting in July, bring 2,500 jobs to state,” Barry Harrell, April 27, 2012