Online giant Amazon facing growing tax woes

The tax hurdles Amazon is experiencing in New York are spreading to other states. For the past few months, the online giant has been challenging the constitutionality of a new law in New York requiring online retailers, or e-tailers, to collect and pay taxes on sales made to New Yorkers even if they have no concrete, physical presence in the state. Federal law dictates that states cannot collect sales taxes from a company without a brick and mortar presence.

But new troubles may be brewing. Amazon has eight distribution centers in eight different states that are operated not by Amazon but by wholly owned subsidiaries, according to the Industry Standard. Amazon is making the case that it should not have to collect taxes in those states. But The Wall Street Journal is reporting this argument can be rejected if the sole function of these subsidiaries is to avoid tax obligations.

When items are coming from the subsidiaries, the Amazon website still shows the seller as Amazon, according to BloggingStocks.com. It is well known that one of the reasons shoppers find Amazon attractive is because they save money on sales tax, which gives Amazon an advantage over other retailers. But many internet-based companies appear to be collecting sales taxes in order to skirt any problems that may arise, BloggingStocks.com reported.

"As governments are greedy for more and more tax dollars, they're looking for any and every target from which to extract money," BloggingStocks.com pointed out. "Sales tax on internet sales is an obvious one."

The Wall Street Journal reported that Kansas began collecting sales taxes from e-tailers, including Amazon, last year. The state collected $35 million in 2007.


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Kathy Wright , 03 July 2008 @ 05:14 AM  Paying taxes is an act of patriotism! Amazon and all corporate taxpayers need to change their mindset on taxes. The problems facing state and federal budget deficits are a result of an anti-tax mood, anti-government in this country. That has led to the current crisis we are facing that money is in the hands of fewer people and the needs of our citizens are not being met. A budget deficit of the size we are facing in the US impacts our ability to compete globally and the quality of life of our citizens. Paying taxes is investing in our country and is a patriotic action. We are all in this together and must solve the problems of our fiscal crisis collaboratively. Kathy Wright Kentucky