The Idaho Statesman reports: When Texas sent Amazon.com a $269 million sales-tax bill in 2010, the world’s biggest online retailer shrugged. As lawmakers forced the issue last year, the company closed a warehouse near Dallas, cutting 119 jobs.
Until April, Texas stood with Idaho and 38 other states that don’t get sales and use levies from Amazon for purchases made by their residents. By one estimate, that will mean more than $11 billion in potential revenue from Web merchants lost this year.
“Online is the fastest growth segment of the retail economy,” David French, senior vice president of government relations at the National Retail Federation, said. The lost revenue has “exasperated” governors, he said.
On April 27, that changed for Texas. The company and Comptroller Susan Combs, R, announced that Amazon would start collecting sales taxes from customers in the state this month and invest $200 million to create 2,500 local jobs in four years. In ending the levy dispute for an undisclosed amount, Texas joined just five other states that get such remittances.
The accord followed a pattern for the company. Amazon has made peace with states such as New Jersey while laying out plans to create local shipping centers and jobs, a move that would require the collection of their sales levies anyway. The retailer plans to build 13 warehouses in 2012, after spending about $4.6 billion to increase the number by a third last year. Kerry Rice, a Needham & Co. analyst in San Francisco, said Amazon may be gearing up to accelerate deliveries in some areas.
“Amazon is smart like a fox,” said Texas state Rep. John Otto, R, who led efforts on applying levies to sales by Web ventures last year. “The minute you put a physical presence in the state, you’re obligated to collect the tax.”
Internet sales and use taxes were the focus of a hearing Tuesday before the Judiciary Committee in the U.S. House of Representatives. States have pressed Congress to act for years without results, and for a decade, Amazon has publicly backed changes in federal law that would ease Web sales-tax collection.
Committee Chairman Lamar Smith, R-Texas, said in an opening statement that the U.S. Constitution doesn’t allow one state to tax other states’ retailers. As a result, “online retailers, who maintain a very limited physical presence and use common carriers to fill orders, enjoy a competitive advantage over traditional retailers,” he said.
Smith said a bill, H.R. 3179, sponsored by Arkansas Republican Steve Womack, would replace the physical-presence rule with a requirement that state and local governments simplify their tax policies if they want to collect sales taxes from out-of-state retailers. Neither of Idaho’s representatives has signed on to cosponsor the bill.
Tennessee Gov. Bill Haslam, a Republican speaking on behalf of the National Governors Association, said more than $400 million in annual sales taxes go uncollected in his state under current law.
When you buy something online or by phone or mail and it’s sent to you in Idaho, it’s subject to state tax. If the seller has a physical presence in Idaho, such as a store, warehouse or sales person, the retailer collects the tax and pays the state.
If a business doesn’t collect sales tax on something shipped to you in Idaho, you owe the state a use tax. Use taxes, on goods used or stored in the state, apply when sales taxes aren’t collected. Idaho’s use tax is 6 percent, the same as the sales tax. You can pay use taxes owed by reporting them when you file your state tax return.
In fiscal 2010, Idaho received more than $59 million in sales and use taxes filed by businesses. But the state Tax Commission estimates that Idaho loses about $35 million annually in unpaid use taxes.
Some Republican governors are prodding Congress for a national solution, along with groups such as the National Conference of State Legislatures in Denver and the National Retail Federation in Washington.
Anti-tax Republicans in the Idaho House this year killed a bill that would have allowed Idaho to join an interstate campaign to collect Internet sales taxes. House Majority Leader Mike Moyle, R-Star, said Congress should act first.