Jeff Bezos, AmazonAs states grapple with increasingly squeezed budgets, one simmering battle -- trying to collect sales taxes from retailing behemoth Amazon (AMZN) -- has heated up considerably over the past year. The jury's still out on how much money states like Rhode Island and North Carolina (which is thick in litigation with Amazon over this very issue) will get from online sales-tax initiatives. But Texas has issued its own bill to Amazon -- to the tune of $269 million.

Although the state evidently said its bill, for uncollected sales taxes from December 2005 to December 2009 with extra interest and penalties, was sent to Amazon in August, The Dallas Morning News reported that the matter wasn't made public until Amazon released its latest quarterly report on Friday. The hefty tax bill was tucked away while the company trumpeted much better news of $7.56 billion in revenue and a 16% jump in earnings for the third quarter of 2010.

In reporting the bill in its filing with the Securities and Exchange Commission, Amazon declared: "We believe that the State of Texas did not provide a sufficient basis for its assessment and that the assessment is without merit. Depending on the amount and the timing, an unfavorable resolution of this matter could materially affect our business, results of operations, financial position, or cash flows. We intend to vigorously defend ourselves in this matter."

Not Really Doing Business in Texas?

The issue of uncollected sales tax runs deeper in Texas because Amazon maintains a distribution center in Irving (close to Dallas-Forth Worth International Airport), which it opened in 2006. Two years later, the Texas comptroller's office launched an investigation into Amazon's bifurcated status.

The company defended its lack of sales tax collection by saying Amazon doesn't actually own the distribution center. It's owned by a subsidiary, KYDC LLC, which is technically based in Kentucky. Assigning the distribution center to a different holding company, by Amazon's logic, means it doesn't have nexus there -- and that's why it feels it's off the hook.

Of course, Texas disagrees, having estimated it loses $600 million a year from untaxed online sales. With a bill sent to Amazon, that opens the door to long-expected litigation between the two parties as well as to the possibility that other states will jump on the collection bandwagon. It may also hamper the retailer's plans to open several more distribution centers around the country because the prospect of sales tax collection may prove too much -- and too costly -- of a headache.

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I am amazed at the amount of taxes we already pay. It seems to be a problem of states not having a way to collect taxes from online sales and I'm really not sure they should be able to. They always seem to waste more than they do any real good. America needs a real awakening cause it is swiftly going down the tubes. Come on America wake up.

October 31 2010 at 8:41 PM Report abuse +2 rate up rate down Reply

This is a great way to run off business's and the JOBS that come with them! Just what we don't need right now in America.

October 31 2010 at 1:01 PM Report abuse +4 rate up rate down Reply

The more taxes are collected ..... the more money is wasted ! I see no reason to support a government that is "addicted" to raising taxes and sees no limit to how much to tax people. You have to be naive to think that more taxes will solve our problems. More taxes create more problems ! ............Tell me readers ..... at what point in your life do you feel that your being taxed enough ? By the way..... you'd better learn what a VAT tax is .... within the next two years.... this tax will come to the USA. You think a 8-10% tax is high ? Wait until the USA has a 15-20% hidden VAT tax on top of a sales tax. Don't beleive me.....simply "Google it".

October 31 2010 at 11:30 AM Report abuse +3 rate up rate down Reply

I'm not sure my opinion on Amazons tax problem, but have you ever really counted the taxes we pay?? Fedral income tax, State Income tax, Sales tax, Property tax, Inheritance tax, Gift tax, Gasoline tax, Some items have exsize tax, and I'm sure there are a few more. I've heard that a working american spends around 45% of thier earned income in taxes of some kind.

October 31 2010 at 10:00 AM Report abuse +3 rate up rate down Reply

I thought Ross Perot set up a Trade Free Zone in their area?

October 31 2010 at 9:19 AM Report abuse rate up rate down Reply

Taxes are the responsibility of the people who make the purchase on line. Texas needs to get a list of people IN Texas who purchased from Amazon and send them a bill.

October 30 2010 at 8:52 PM Report abuse rate up rate down Reply

Why dosen't Amazon move to china like everybody else is doing to keep from paying taxes ..

October 30 2010 at 1:26 PM Report abuse +4 rate up rate down Reply
Timothy Rye

First of all the state shouldn't of waited till it was that high. Secondly the company should of sent the money to the state as they received it.

October 30 2010 at 12:11 PM Report abuse -2 rate up rate down Reply
2 replies to Timothy Rye's comment

They don't receive any sales tax if they aren't adding it to the sale and collecting it from the consumer!

October 31 2010 at 1:52 AM Report abuse +3 rate up rate down Reply
Mr. President

First, the phrase is SHOULD HAVE, not SHOULD OF. Second, they don't owe one penny because they do not collect sales tax. I never realized how stupid people really are until I read comments like yours and "pleasontonnow"

October 31 2010 at 11:41 AM Report abuse +1 rate up rate down Reply

It is about time that this happened. What is the difference between Amazon and the rest of the retailing world that has to collect sales tax for the states. I'm glad I'm from the great state of Texas who took the initiative to correct this unfair practice!

October 30 2010 at 11:30 AM Report abuse -4 rate up rate down Reply
1 reply to cisnerosjewelers's comment

Your just ticked off because people are buying from Amazon and not you so they can save the sales tax

October 31 2010 at 1:55 AM Report abuse +3 rate up rate down Reply

The River Rats shoul open their distribution centers in NOMAD N ew Hampshire O regon M ontana A laska D elaware America Inc. Consultants to Buisness and Governments CRC

October 29 2010 at 12:02 PM Report abuse rate up rate down Reply