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Amazon to begin collecting sales tax in Texas as part of new settlement

Amazon to begin collecting sales tax in Texas as part of new settlement


Amazon has agreed to begin collecting sales tax on items shipped in Texas starting July 1st, 2012 as part of a new settlement that also requires it to invest in in-state projects.

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Amazon's tax status has long been a sore point for local and national governments. The online retailer doesn't collect sales tax in most US states, something that critics say both deprives states of revenue and gives it an unfair advantage over local businesses. On its latest SEC filing, though, the company acknowledges plans to begin adding tax to purchases in Texas starting July 1st, 2012. This decision resolves a dispute from 2010, when Texas assessed a $269 million charge in unpaid sales taxes from 2005 to 2009. Previously, Amazon has said that state-level attempts to collect taxes are backed by "big-box retailers" and has threatened to pull affiliates and distribution centers out of states that pass so-called "Amazon tax" laws.

Under a new settlement, Amazon doesn't need to pay back the uncollected taxes, and it still says it believes the charges are "without merit." However, besides adding sales tax, it plans to "create at least 2,500 jobs and make at least $200 million in capital investments" over the next four years. This agreement would make Texas the sixth state (after Kansas, Kentucky, New York, North Dakota, and Washington) to get sales tax from Amazon, with California and Nevada both joining this list over the next two years. Texas Comptroller Susan Combs, however, says Amazon's piecemeal agreements don't go far enough. "Congress should enact federal legislation that will give states access to revenues that are already due, which would resolve this issue fairly for all retailers and all states," she stated in her press release.