Amazon asks Texas for break on collecting sales tax in exchange for 6,000 jobs, but will collect regardless upon federal legislation

According to Internet Retailer and the Austin-American Statesman, Amazon’s Paul Misener, Vice President of Global Public Policy, has sent a letter to Texas legislators asking that Amazon be exempt from a provision in Texas’ budget bill that says any retailer with a distribution or fulfillment center in Texas must collect sales tax from Texas customers. (The Statesman article includes a link to the letter itself, which we have provided here.) In return, the letter suggests, Amazon could create 6,000 jobs in Texas:

I am writing to request your support for a safe harbor provision in the budget bill that would allow Amazon fulfillment and customer service affiliates to bring Texas at least 6,000 new full time jobs with comprehensive health care and other benefits, as well as at least $300 million in capital investment.

This is an increase from Amazon’s previous offer of 5,000 jobs. In the end, the letter says, Amazon could generate over 10,000 new jobs in Texas:

South Carolina recently enacted a nearly identical law that will bring at least 2,000 jobs and $125 million to that state, where officials estimate that the number of indirect jobs created will be at least as great as the number of direct jobs. By the same calculus, Texas stands to gain well over 10,000 new jobs.

You can find more about the Texas debate over Amazon and sales tax here.

Interestingly—and this part isn’t mentioned in either article—Amazon’s exemption would end upon the enactment of federal legislation on sales tax collection:

This safe harbor provision would serve as a time-limited exception to the new tax nexus language already included in the budget bill, and would expire immediately upon the effective date of a federal law on state sales tax collection. (emphasis added)

The South Carolina deal contained a similar provision. The state’s Senate Bill 36, which automatically became law a week ago without the governor’s signature and which amended South Carolina’s tax code to include the terms of the deal with Amazon, says that the deal will not apply upon

the effective date of a law enacted by the United State Congress that allows a state to require that its sales tax be collected and remitted even if the taxpayer does not have substantial nexus with that state.

(If you click the above link to look at the bill, scroll down to section 3 for the language regarding the deal with Amazon; the provision about federal legislation is at section 3, paragraph D, line 3.)

Amazon has long said that it supports federal legislation on online sales tax collection, and we’re thrilled to see that it’s, if you’ll forgive the cliche, “putting its money where its mouth is.”

While states and retailers remain at loggerheads over state sales tax collection laws, it’s remarkable that they agree on thing: the need for federal legislation. Congress, are you listening?

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