Retailers who charge sales taxes employ thousands of Texans, and some of those sellers are in tough financial straits. Giving a price advantage to their out-of-state rivals doesn’t seem fair, they argue. Amazon didn’t answer requests for comment.
The legislative and political fight has all sides lobbying and lawyering up. Amazon has focused on the tax fight, leaving the legislative battles to Luis Saenz, a former campaign manager for Rick Perry who is the company’s lone lobbyist in Austin. He’s outnumbered by lobbyists for various trade groups and big stores. For example, Mike Toomey, the governor’s former chief of staff, is working for parity between the different types of sellers. So is Eric Bearse, a former Perry speechwriter and spokesman.
The comptroller argues that the physical presence is the trigger — not whether the company operates a cash register in the state.
The difference isn’t over the taxes owed, but over who should be sending them to the state. You might not know this, but if you buy something that’s taxable in Texas, you owe the taxes whether the seller collects them from you or not. That’s true for over-the-counter sales, mail-order sales or online sales. It’s called the use tax, and it’s the state’s levy on purchases from companies that don’t have a physical presence, or “nexus,” in Texas.
If a company does have operations here — and nexus exists — it is supposed to collect sales taxes from customers and remit them to the state. The state pays retailers for their trouble giving them 0.5 percent of the sales taxes they collect to cover their costs.
“Our official position is that if you have a physical presence in the state, and employees in the state, you have nexus,” says Dale Craymer, president of the Texas Taxpayers and Research Association, a business trade group that does research and lobbying on fiscal and tax issues. “The comptroller is basically taking the heat for doing what the law requires her to do.”
Combs did an audit of the company and followed with a demand that Amazon pay $269 million in uncollected sales taxes for the four years from December 2005 to December 2009. The amount came to light in regulatory filings by the company late last year, and the fight has now gone to the lawyers. Amazon wants the state to share its audit of the company, and has started its challenge in the State Office of Administrative Hearings, a precursor to a full court fight.
Along those lines, a few Democratic legislators have asked Combs to show her work.
Three state lawmakers are calling on Texas Comptroller Susan Combs to explain how her office arrived at the assessment it levied last year against Amazon.com for uncollected sales taxes.
The letter — sent Tuesday by state Reps. Pete Gallego, D-Alpine, Joaquin Castro, D-San Antonio, and Jessica Farrar, D-Houston — asks for a meeting this week with Combs.
Last year, Combs sent Amazon a notice that it is responsible for $269 million in sales tax. Amazon has disputed that assessment.
In their letter, Gallego, Castro and Farrar say it is “fundamentally unfair” to tell Amazon it owes millions in uncollected sales taxes without explaining how the state arrived at that figure. “Texans have never accepted ‘taxation without representation,’ not should they accept ‘taxation without explanation’…” the letter says.
Comptroller’s spokesman Allen Spelce, however, disputed the contention that Amazon wasn’t told how the assessment was made.
“It’s inaccurate to say that we did not release the details of (Amazon’s) tax bill. We did explain to them how the tax bill was calculated,” Spelce said.
Spelce said Combs or someone from her staff would be available to meet with Gallego, Castro and Farrar.
House Bill 1317 defines a taxable retailer as one that brings in at least $10,000 a year in Texas or has an agreement with a Texas resident “for directly or indirectly referring potential customers to the retailer.”
The bill “is modeled after laws that have been passed in other states to make it a clear connection between companies doing business in those states and having to collect sales tax,” Naishtat said. “This bill will generate hundreds of millions of dollars for Texas. I would be surprised if Gov. Perry has a problem with this.”
Let’s just say that my capacity for being surprised by the Governor is not as large as that. Perhaps some of those high-powered lobbyists that the retailers have on their side can help grease the skids a bit. I most certainly support this bill, but color me dubious as to its odds of getting passed. Patricia Kilday Hart has more.
UPDATE: Combs responds to the letter, and pushed back against Perry.