Texas Happy with Amazon Tax
- Aug 12, 2015 | Gail Cole
Amazon has been collecting sales tax on its Texas transactions since July 2012, after a tense stand-off between state and company. Texas had challenged the online seller’s policy of not collecting sales tax and handed the company a bill for hundreds of millions in back sales tax; in response, Amazon had threatened to close its Texas distribution facility. After a rodeo’s worth of wrangling, the state and company agreed to make peace. Texas shredded the bill for back taxes and provided numerous incentives for the company to stay and expand; and Amazon agreed to invest at least $200 million in Texas, create at least 2,500 jobs, and start collecting sales tax in 60 days.
State officials have been told by Amazon that it now has more than 3,500 employees in Texas (see press release), and that it had made more than $300 in capital investments in Texas by the end of 2014, more than satisfying the terms of the agreement.
To date, Texas seems happy with the arrangement. The state’s sales tax collection categorized under Web retailers/electronic shopping “has grown significantly,” although not all of that growth can be attributed to Amazon sales. As Comptroller Glenn Hegar recently told the Austin American-Statesman, “I believe Texas benefitted from the deal with Amazon….The agreement also allowed Amazon to start building warehouses and to greatly expand their physical presence in the state, which was largely beneficial to the economy.” Had the deal not occurred, Hegar estimates “the alternative could have been years of litigation and a lack of economic investment in the state.”
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