Texas vs Amazon: Who won?


TEXAS -After two-years of wrangling over sales tax, in 2012, former comptroller Susan Combs reached an agreement with the on-line retailer over uncollected and un-remitted sales tax owed to the state.

In 2010, Texas sent a demand letter for $269 million in sales taxes that the state argued should have been collected and remitted for sales to Texas customers. This dollar amount covered uncollected taxes from December 2005 to December 2009 and also included penalties and interest. Amazon threatened to close a facility it operated in Irving, eliminating 119 jobs and shutting Texas out of future expansion plans.

The agreement saw the state drop its demand that the e-commerce giant pay $269 million in back sales taxes in exchange for Amazon agreeing to collect state sales taxes beginning July 1, 2012. The Seattle-based firm also got incentives to create jobs and make capital investments statewide.

Three years on, a much-watched deal to settle a sales tax collection dispute between Texas and Amazon.com appears to have benefited both sides, according to an analysis published Sunday August 9, 2015 by The Austin American-Statesman.

The Statesman used Texas comptroller’s office data to show that collecting sales taxes from Texas residents on Amazon purchases added hundreds of millions of dollars to state coffers. Meanwhile, Amazon told state officials this summer that it had 3,500-plus Texas employees and had made $300 million in capital investment statewide through the end of last year — exceeding benchmarks set as part of the agreement.

The Texas-Amazon deal is a great example of how negotiating with state taxing jurisdictions on existing contested issues can benefit both sides. The Texas-Amazon deal is a case that future businesses can look too when needing to resolve pending issues with various state taxing authorities. This is basically a great outcome and a win-win for everyone involved, said Chanel Christoff Davis partner at Davis & Davis LLC 

According to the current Texas comptroller Glen Hegar stated, “I believe Texas benefited from the deal with Amazon. The agreement meant Amazon began collecting and remitting taxes to the state, which the comptroller’s office felt were legally due, 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.”

About Davis & Davis LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis & Davis LLC – Sales Tax Experts specializes in sales/use tax audit consulting and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis & Davis we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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