Amazon, Comptroller Negotiating Sales Tax Deal

Amazon.com is negotiating with the state to start paying Texas sales taxes on online sales and to create some jobs in the state, reviving talks that fell apart at the end of last year's legislative session, sources involved in the conversations said today.

A deal would apparently end the state's attempts to force the company to collect sales taxes. Comptroller Susan Combs accused the company of ducking $269 million in sales taxes it should have paid from December 2005 to December 2009. The company threatened to close a warehouse operation in Irving that it said employed about 120 people.

The comptroller's office had no immediate comment about the talks.

"There are meetings going on, but I can't tell you much else about it," said state Rep. John Otto, R-Dayton. He's been involved in the online sales tax issue at the legislative level, but said he isn't directly involved in current negotiations.

This week, the company reached agreement in a similar dispute in Nevada and is reportedly negotiating sales tax agreements with other states. No hard estimates are available on what such an agreement would bring into the Texas treasury. In its lawsuit, the state put the annual number at about $70 million. In Nevada, where the sales tax ranges up to 8.1 percent, officials expect the Amazon deal to bring $16 million annually into state coffers.

Retailers with Texas operations have to charge sales taxes of up to 8.25 percent and argue that Amazon and other online retailers without brick-and-mortar stores here are gaining a price advantage by not collecting sales taxes from their customers.

"As long as they'll start collecting sales taxes this fiscal year or within the next four or five months, that's really what's important," Otto said. "We've got to level this playing field."

Customers, under state law, owe the tax whether the retailers collect it or not. But that law is widely ignored and rarely enforced, except when very large purchases are involved.

Amazon.com has said in corporate and court filings that the state's estimate of its tax liabilities are incorrect. And it has argued that it doesn't have the types of physical locations in Texas that would require it to collect taxes like other companies such as Apple or Barnes and Noble. The Legislature amended that so-called "nexus" requirement last year, specifically including facilities like the one Amazon.com was operating in north Texas.

Near the end of last legislative session, the company offered to invest $300 million in five or six warehouses employing 6,000 people in Texas, if the state would agree to let it go four and a half more years without collecting sales taxes. It also agreed to print on each customer invoice how much those customers should pay in sales taxes, without agreeing to collect those taxes itself. Gov. Rick Perry, who had vetoed an early version of the nexus legislation, was in favor of that deal, but lawmakers wouldn't go along. South Carolina agreed last year to a five-year moratorium on collections. The company got a one-year moratorium in California.

"I told Susan [Combs] I just want a better deal than California got," Otto said.