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Amazon capitulates on state taxes

July 30, 2011 at 12:46 PM   |   Comments

SEATTLE, July 30 (UPI) -- U.S. Internet giant Amazon said it would support an even-handed approach to online businesses collecting state sales taxes.

In a letter to Sen. Dick Durbin, D-Ill., Amazon said, "a simple nationwide system of state and local sales-tax collection, evenhandedly applied to all sellers no matter their business model, location of level of remote sales," would be acceptable, the Los Angeles Times reported Saturday.

Durbin in the Senate and Rep. John Conyers, D-Mich., in the House are planning to introduce legislation to overturn the 1992 Supreme Court ruling that allows businesses to avoid paying state taxes if they have no physical presence in that state.

Several states, including New York and California, have passed laws to try to force online companies to pay state and local taxes. Amazon is suing New York State over its law.

But companies may see the writing on the wall. California's law stretches the definition of a physical presence in a state by including Internet firms in the state that have links that feed customers to out of state companies.

By extension, Amazon is in California, because firms that run Web sites that refer customers to Amazon are in California, according to the statute that took effect July 1.

Amazon has also started lobbying in California to have that law reversed.

The argument from Main Street is that a store selling the same item that an out-of-state Internet firm is selling is at a disadvantage. By law, the Internet firm is afforded a built-in discount equal to the state's sales tax.

Katherine Lugar, vice president of the Retail Industry Leaders Association, a group that represents Walmart Stores, Inc., Target Corp. and other national retailers, said, "Government shouldn't be picking winners and losers by giving a handful of companies a competitive advantage over everyone else."

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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