Legality of Amazon-Texas sales tax deal questioned
- unverified comments
Thank you for your submission.Error report or correction
AUSTIN, Texas (AP) - Celebrations over the state of Texas settling a sales tax dispute with Amazon.com may soon be tempered.
Under the deal announced by Texas Comptroller Susan Combs, the online retail giant will begin collecting sales taxes July 1 on purchases from Texas. Amazon also promises 2,500 new jobs for the state and $200 million in capital investment over four years.
But Austin tax lawyer Buck Wood says the deal could be illegal, as federal regulatory filings show that Amazon made an "immaterial payment" on $269 million in back sales taxes owed to Texas.
Wood, a former deputy state comptroller and general counsel under late Texas Comptroller Bob Bullock, told the Austin American-Statesman (http://bit.ly/ISu6un ) that the state constitution prohibits "forgiving" tax debts.
Wood is concerned that the deal creates a class of "too big to pay" taxpayers who get preferential treatment.
"While this may seem to be a reasonable resolution in people's minds, it's not worth the paper it's written on," Wood told the newspaper.
Combs denied ever "forgiving" taxes in violation of the Texas Constitution, her aides told the newspaper. Amazon declined to comment.
There is also concern about a state law that gives the comptroller the power to settle cases when the "costs of collection" exceed what is owed. Wood contends that phrase is limited to the costs of litigation, while Combs and her aides say future benefits to Texas can also be weighed in the balance.
"We consider the risk of adverse decision and the upside of obtaining compliance with tax laws when deciding whether to settle a case," Combs said through her aides.
It may be left to Texas Attorney General Greg Abbott to decide the matter, should lawmakers or local governments ask for his opinion.
However, since the "immaterial amount" Amazon paid is protected as proprietary information, "we don't know how to evaluate this case because we don't know the facts," retired Austin tax lawyer Skip Smith told the American-Statesman.
Another former deputy comptroller, Billy Hamilton, defended Combs' authority to settle cases, even though they the settlements would still be open to questioning.
"There obviously was a quid pro quo," he told the newspaper. "You walk away from a quarter of a billion dollars, but you get jobs. It's a question of judgment."
Information from: Austin American-Statesman, http://www.statesman.com