I was looking through various resources this morning and found a couple of worthwhile articles. The first is about Amazon beginning to collect sales tax in Nevada. The online retailer has reached an agreement with the state of Nevada to start collecting sales tax beginning in 2014. This is similar to agreements reached with Texas and California earlier in the year where they will begin collection of sales tax in July, 2012 and September, 2012 respectively. For each state, the issue at hand is sales tax nexus and whether Amazon has a physical presence in their state.
The Texas agreement is interesting in that there are multiple moving parts. First, the state had originally assessed Amazon $269 million in sales tax from 2005 through 2009. This assessment is what triggered the negotiations between the parties. As part of the agreement to begin collecting in Texas, Amazon also agreed to bring 2,500 jobs to Texas along with $200 million in capital investments. Amazon also made an “immaterial payment” to the state to resolve the disputed sales taxes from 2005 – 2009. Some people are asking did the state Comptroller have the authority to waive these taxes.
I won’t comment as to whether the Comptroller had the authority or not to waive the sales taxes. But it seems to me Texas had a fairly compelling position in assessing the sales tax initially. Amazon had a subsidiary with a warehouse in Texas where goods were shipped to customers of Amazon’s. I suspect the relationship and the activities performed by the subsidiary on behalf of Amazon presented a likelihood of sales tax nexus. I’m not familiar with the legal structure of the subsidiary and how it related to Amazon so I’ll withhold a final opinion for now. (If anyone knows of a more detailed analysis of this situation I’d be interested in reviewing it.)
Enjoy the articles!