SEC is Investigating Amazon About the Sales Tax Disputes

There was a fascinating little footnote in the paperwork Amazon filed with the Securities  & Exchange Commission today. Guess who is being investigated?

In September 2010, the State of Texas issued an assessment of $269 million for uncollected sales taxes for the period from December 2005 to December 2009, including interest and penalties through the date of the assessment. The State of Texas is alleging that we should have collected sales taxes on applicable sales transactions during those years. We believe that the State of Texas did not provide a sufficient basis for its assessment and that the assessment is without merit. We intend to vigorously defend ourselves in this matter. In March 2011, the SEC staff notified us of an inquiry concerning this assessment, and we are cooperating with the staff’s inquiry.

I wouldn’t read too much into it. If Amazon had actually done something seriously wrong, we would already know about it. Some financial analyst would have already connected the dots.

Although I have to say that I’m surprised that Amazon is referring to the Texas matter in the present tense. I had thought that particular dispute had already been resolved.The core of the dispute was whether Amazon’s distribution center in Texas qualified as a presence in the state. If it did then Amazon had to collect taxes. If not, then no.

I’m not a tax expert but the one I consulted said that Amazon was probably right on this issue. But it doesn’t matter; the Governor of Texas conceded the issue rather than lose the distribution center and the jobs it brought in.

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