Interesting Amazon said to owe Texas $269 million in sales taxes. And instead of paying they closing all facilities and planned faciliities there. http://finance.yahoo.com/news/APNewsBreak-Amazon-closing-TX-apf-1138591325.html?x=0&.v=5 Thing is, they can't close facilities in every state or they would be out of business. also if they actually had to pay the sales tax bill for one state that would eat up most of the $300 million projected income for the coming quarter. If all the states sued for sales tax AMZN would be insolvent. I watch in amazement how the stock has bad earnings and outlook and it goes up 8 straight days. Hail Bernanke.
I used to have a nice personal arb buying amazon.com books and shipping them to Canada... used to save the tax that amazon.ca was charging... Ended last year though.
If I were amazon id tell Texas to collect the use tax from every person in Texas who bought from amazon
Amazon is looking to open two distribution centers in TN if they can get some tax breaks and not be subject to sales tax. There is fierce opposition to giving Amazon the breaks. As states continue to face big deficits the days of no internet sales tax are probably numbered.
Amazon should adopt the reverse logistics approach. Set up distribution in states that have no sales tax. Convert their shipping to Customer initiated Call Tags for a "will call". This way the transaction is not interstate commerce but a local transaction. This is the approach invented by the online cigarette shops to circumvent the Jenkins act keeping their asses out of federal court.
AMAZON'S TAX HOLIDAY WILL NOT LAST FOREVER, AS STATES GET MORE NEEDY AND THE FEDERAL GOVT RUNS ON EMPTY LAWMAKERS WILL MOST CERTAINLY CLOSE AMAZONS LOOPHOLE, I WISH I KNEW WHEN ITS GONNA HAPPEN, COULD BE A PROFITABLE SHORT
Many states are broke so they're going after funds in any manner they can. However, if Amazon is forced to collect new sales taxes it would not affect their existing cash unless they were ordered to pay back-taxes for sales already made in the state (such as Texas), which would undoubtedly involve litigation and could take years to resolve. In any case, those who are long AMZN may soon find that holding a stock that trades a 50 multiple can also trade down just as fast.
But the problem is now that they are leaving texas the state just lost revenue on the property tax, unemployment tax, state withholding....etc sure it wasnt close to 260 million but it still was a nice amount
They are still responsible for the real estate taxes on property and inventory they own. And, penalty and interest are mounting on past due taxes. AMZN surely does not want this to go to court as they are betting the company on the outcome. If Texas wins case, 49 states will come after them for taxes, past and present. What is AMZN profit if it has to collect/pay sales tax in each state, justl like WMT? I have no posistion but it will be interesting to watch over the next couple of years. Could be a $30 stock... SteveD