Amazon Closing Irving Facility, Citing State Tax Battle

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    NEWSLETTERS

    TK
    AP
    Amazon.com worker David Brendoff, left, moves boxes with merchandise for shipment Tuesday, Dec. 13, 2005, at the Amazon.com fulfillment center in Fernley, Nevada. With the holidays just around the corner, many shoppers are relying on online sites like Amazon.com to complete their shopping. This facility, over 800,000 sq. ft., or roughly 13 football fields, is capable of handling hundreds of thousands of orders per day. (AP Photo/Ben Margot)

    Online retail giant Amazon.com will close its Irving facility as the company battles the state of Texas, demanding it produce an audit on which the state bases its demand for $269 million in uncollected sales taxes. 
     
    The state made the demand of the Seattle-based company in September, citing the audit.   The Texas comptroller's office has been withholding the report from Amazon, citing a Dec. 16 attorney general's opinion that it was protected by attorney-client privilege.

    The state contends that Amazon.com is responsible for sales taxes not collected on online sales in Texas because Amazon has a distribution center in Irving. Other companies with retail outlets or other types of physical presence in a state collect sales taxes on online sales.
     
    Amazon filed a lawsuit in January in Travis County state district court, contending that the state must disclose the audit under the state's Public Information Act.
     
    According to the court documents, Amazon sent letters in September and October to the state comptroller's office, requesting "Information related to the audit and the assessment."
     
    The online giant has been the target of numerous lawsuits filed by states seeking sales taxes on online purchases made from within their jurisdictions. Online competitors such as Dell Inc., J.C. Penney Co. and Sears Roebuck and Co. have complained about having to levy the sales taxes while Amazon does not.
     
    “We regret losing any business in Texas, but our position hasn’t changed.  If you have a business presence in the state of Texas—just like any other business here—you owe sales tax,” Texas Comptroller spokesperson Allen Spelce said in a telephone interview Thursday afternoon.

    “We estimate we lose $600 million a year in internet sales, [including Amazon],” Spelce said.
     
    A message was sent to employees this week notifying them of the Irving facility’s closure, Amazon spokesperson Mary Osako said.
     
    The letter obtained by NBCDFW reads:
     
    Dear Associates,
     
    Because of the unfavorable regulatory climate created by the Texas Comptroller's office, we are making the difficult decision to close our DFW1 fulfillment center on April 12, 2011.
     
    Despite much hard work and the support of other Texas officials, we’ve been unable to come to a resolution with the Texas Comptroller’s office.
     
    Closing this fulfillment center is clearly not our preferred outcome. We were previously planning to build additional facilities and expand in Texas, bringing more than 1,000 new jobs and tens of millions of investment dollars to the state, and we regret the need to reverse course. We will be offering positions in our other U.S. facilities to each of you who wish to relocate.
     
    We will be discussing and answering any questions you may have about this at today's all-hands meeting.

    Sincerely,
    Dave Clark
    Vice-President, N.A. Operations

    (Background information from a previous Associated Press article was used in this report.)