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Under fire from the states, Amazon will thrive anyway.
Eric Savitz, 03.23.11, 06:00 PM EDT, Forbes Magazine dated April 11, 2011
A few months ago I went to my local Best Buy ( BBY - news - people ) to buy a new TV and a Blu-ray player. I picked out an LED backlit 26-inch LCD model from LG and almost bought it right then. Instead I whipped out my iPhone and found Amazon.com ( AMZN - news - people ) selling the same model for $10 less.
I did a similar search for the Blu-ray player I wanted. Again, $10 cheaper. So I drove home and ordered from Amazon. I saved $20 on the gear and another $50 avoiding the 9.5% sales tax. And as an Amazon Prime member, I had my toys shipped in two days for free.
I tell you this story for a reason: It highlights the issues behind the current furor over Amazon's ability to avoid levying sales taxes in most states.
Amazon has been relying on a 1992 U.S. Supreme Court case, Quill v. North Dakota, which found that a state can't impose a sales tax on mail-order transactions when the seller has no physical presence in that state. In states where Amazon has retail operations--its HQ in Washington, for instance--it collects taxes. Amazon has taken creative steps to dodge the taxman elsewhere, but it faces increasingly intense attacks from the states. Texas last year sent Amazon a bill for $269 million in uncollected taxes on purchases made by Texans over a four-year period, noting that Amazon has a Dallas-area warehouse. Amazon's response? Screw Texas. It is closing the warehouse.
Click here for the complete story at Forbes.com.
See related:
Amazon drops Illinois affiliates in fight with states
Amazon's Exit Spurs Tax Fight in Texas
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