Voices

Amazon Fights off the Tax Man

Amazon.com has been pushing back aggressively against efforts to impose sales taxes, but it could be going too far in Tennessee.

The Seattle-based company is being wooed by Tennessee officials with a package of economic incentives to build a distribution hub there, according to the Seattle Times. The enticements so far include free land, job-training help and over $12 million in property tax breaks. However, the e-tailer also wants to get its sales to Tennessee residents exempted from taxes, which would fly in the face of state nexus rules (and a Supreme Court decision) that allow states to collect sales taxes from companies that have a physical presence there. It is unclear if Amazon will win that battle, but discussions with state and local officials are ongoing.

In the meantime, Amazon won another battle in the sales tax war, albeit indirectly, this week. A federal judge in Colorado issued a preliminary injunction on Wednesday to keep the state from enforcing a law that was passed last year to force out-of-state retailers to report their customers’ sales to the state Department of Revenue if they exceed $500 and to send customers an annual notice of how much they owe the state in taxes, according to the Associated Press.

The lawsuit challenging the law was not brought by Amazon, but by the Direct Marketing Association, a trade association. However, the Colorado law has been seen as a way to pass a so-called “Amazon tax,” so online retailers like Amazon are the main beneficiaries.

U.S District Judge Robert Blackburn ruled that the law was unconstitutional and violated the interstate commerce clause. Now a group of Republican lawmakers in the state want to repeal the law, which was spearheaded by Democratic legislators. Last year, Amazon cut off ties with its affiliates in Colorado as a way to try to short-circuit the law, as it did with several other states like Rhode Island and North Carolina that also tried to impose sales taxes on the company’s customers. If Colorado passes a repeal of the law that the judge has now ruled unconstitutional, Amazon could be welcoming those affiliate sites back with open arms.

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