Amazon closing Texas center amid dispute

Amazon closing Texas center amid dispute

February 10th, 2011 by Associated Press in Local - Breaking News

AUSTIN, Texas - Online retail giant Amazon.com is closing a suburban Dallas distribution center and scrapping plans to expand Texas operations after a dispute with the state over millions of dollars in sales taxes, an executive informed employees Thursday in an e-mail obtained by The Associated Press.

Dave Clark, Amazon's vice president of operations, writes in the e-mail that the center will close April 12 due to Texas' "unfavorable regulatory climate." It was not immediately clear how many employees work at the facility.

The Texas comptroller's office last year demanded $269 million in uncollected sales taxes from Amazon. The company subsequently filed a lawsuit against the state, demanding it produce the audit that generated the figure.

The state contends Amazon.com is responsible for sales taxes not collected on online sales in Texas.

"We regret losing any business in Texas, but our position hasn't changed: If you have a presence in the state of Texas you are required to pay sales tax, just like any other business that has a presence in Texas," said Allen Spelce, a spokesman for Texas Comptroller Susan Combs.

Spelce said Texas loses an estimated $600 million in Internet sales taxes every year.

Amazon has been the target of numerous lawsuits filed by states seeking sales taxes on online purchases made from within their borders.

Clark said in his e-mail that the company also is scrapping plans "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."

Texas employees who are willing to relocate will be offered positions in other states, Clark said.

The Irving distribution center, known as a fulfillment center, opened in 2005.

During Amazon's fourth-quarter earnings conference call last month, CFO Tom Szkutak said company had 52 fulfillment centers after adding 13 in 2010.