Amazon said in a regulatory filing this week that the SEC is looking into its dispute with Texas, which began last year when the Texas comptroller’s office sent Amazon a $269 million assessment for four years of uncollected sales taxes.
“In March 2011, the SEC staff notified us of an inquiry concerning this assessment, and we are cooperating with the staff’s inquiry,” Amazon said in its SEC filing.
The company gave no additional information. An SEC spokeswoman declined to comment on the investigation Friday.
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In an earnings conference call this week, Amazon Chief Financial Officer Tom Szkutak sought to downplay the potential impact if more states put an end to tax-free online sales. He said Amazon generates more than half of its revenue in places where it already collects sales or consumption taxes, including markets outside the U.S.
However, in Amazon’s SEC filing, the company wrote that additional tax obligations “could create administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on all of our online competitors, and decrease our future sales.”
Whatever. If the only reason Amazon is viable is because they have this tax advantage over brick and mortar stores, then they’re not really viable at all. Does anyone believe they’ll go down the drain if they have to pay sales taxes? I don’t either. Quit whining, Amazon.
On a related note, Amazon is pulling out of another state over a sales tax dispute.
On the heels of a legislative vote in South Carolina that rejected Amazon’s plea for a sales tax collection exemption, Amazon said it won’t open a distribution center in the state, a project that included a one-million-square-foot building already under construction and 1,249 jobs.
“As a result of today’s unfortunate House vote, we’ve canceled $52 million in procurement contracts and removed all South Carolina fulfillment center job postings from our (Web) site,” said Paul Misener, Amazon vice president for global public policy, according to a report on The State newspaper website.
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Amazon’s “our way or the highway” strategy suggests Amazon thinks it will easily find other alternatives to fulfil the company’s needs to open more distribution centers to keep those boxes of goods flowing. Maybe so. But it remains to be seen if this is a sustainable strategy, given the fact that Amazon currently doesn’t collect sales taxes in half the U.S. states.
Amazon this week said it plans to open 11 distribution centers, maybe more, as the company tries to keep up with demand from consumers who have flocked to its website looking for deals on books, music and other merchandise.
But Amazon also has played hardball in states where Amazon does not collect sales taxes from those sales. In March Amazon announced it was closing its affiliate program in Illinois, a day after the governor signed a law requiring Amazon and other online retailers to collect sales taxes on goods sold in the state.
Via Dwight. I’ll say it again, this really needs to be resolved at the federal level, and the sooner the better.