Texas Sends Amazon.com a $269 Million Bill 

The Amazon wars are heating up something fierce. We’ve learned Texas has sent Amazon a bill for $269 million dollars related to unpaid online sales tax. 

This latest move represents yet another state trying to attack Amazon.com and other big online retailers. The goal? Raise tax revenue of course. States have been spending money like drunken sailors in port for the first time in six months. When the Great Recession hit, revenues came up short and an effort to find new ones was undertaken.

The general attack by states on large internet retailers like Amazon has been ineffectual. The primary reason is that no particular case has wound its way up to the Supreme Court where a universal decision can be made. The states argue that online retailers have an advantage over state stores given the lack of tax paid while online retailers argue it will be an incredible burden to have to pay and report sales tax in over 3,000 different jurisdictions when taking into account state, county and city taxes. 

So, who should win? Ultimately, Amazon has a very strong position. The United States Supreme Court has previous decided the issue in relation to catalog companies. Where such companies did not have a physical presence in a state, the mere fact they sent catalogs and mailed products to people in the state was not enough to create a taxable situation. It is more likely than not that the Supreme Court will reaffirm this decision in relation to online retailers as well.

Where will this all end up? There is only one destination – the United States Supreme Court. Unfortunately, the current set of Justices is just this side of moronic, so the ultimate decision is hard to predict. If it is like most of their other rulings, it will be complex, confusing and damn near impossible to apply without spending a bundle of money.