Amazon, State Settle Sales Tax Fight

Amazon.com will start collecting sales taxes from Texas customers this summer and agreed to make capital investments of $200 million and create 2,500 jobs in the state over the next four years, Comptroller Susan Combs announced this morning. In return, the state will drop its efforts to collect back sales taxes from the company.

The online retailing giant hasn't been collecting sales taxes from customers in Texas (and in many other states), citing a provision in the law that exempts companies without a physical presence in the state from taking part. The comptroller filed a $269 million tax lien against the company, pointing to a warehouse operation in Irving and saying it should have been collecting and remitting taxes from December 2005 to December 2009.

That's been in dispute for more than a year.

The company said its Irving operation wasn't the sort of presence that triggers sales tax collections. The Legislature changed the law to clarify that — forcing the company to either close its Texas operations or start collecting the taxes. Amazon offered to open five or six warehouses and create thousands of jobs in return for a four-and-a-half-year moratorium on collecting Texas sales taxes, but that deal fell through during the legislative session. 

With the new deal, the company will start collecting sales taxes on July 1.

Both Combs and the company pressed Congress to work on a federal solution that would ease collections of state sales taxes for online sellers like Amazon that operate nationally.