Texas Governor Signs Bill With Sales Tax Fairness Language

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On Tuesday, July 19, Texas Gov. Rick Perry signed legislation that makes clear that companies that have warehouses in the state, such as Amazon.com, must collect and remit sales tax.

ABA CEO Oren Teicher lauded the signing of SB1, an omnibus fiscal matters bill, and thanked Rep. John Otto and Sen. West, who sponsored the bills in regular session, and Rep. Jim Pitts and Sen. Robert Duncan, who sponsored the bill in the special session.

“We are grateful that the Texas legislature stood up for Main Street retailers and the principle that it’s not the role of government to pick and choose among retailers for favorable treatment,” said Teicher. “We also wish to thank Steve Bercu of BookPeople, Valerie Koehler of Blue Willow Bookshop, and all of our other Texas members for their outreach in this sales tax fairness campaign. It is unfortunate that Amazon.com has convoluted this issue to the point that states need to clarify that a warehouse or a distribution center is, indeed, a physical presence in a state. But, that said, we are pleased that Amazon.com and other remote retailers in similar situations can no longer skirt sales tax laws via loopholes. As we’ve stressed in our correspondences with Texas State Comptroller Susan Combs, we believe that Amazon.com not only has a physical presence — and nexus — via its warehouse, but also through its countless online affiliates that act as sales agents. As such, we believe that Amazon.com, because of its affiliate alone, should be collecting sales tax in Texas.”

In May, South Carolina and Tennessee lawmakers provided Amazon.com with a sales tax exemption, despite its physical presence in the states due to its distribution centers. The legislative action followed the online giant’s threats to build warehouse facilities elsewhere if the exemptions were not granted. In late June, Amazon.com tried the same tactic in Texas in an effort to avoid collecting and remitting state sales tax.

Rather than close its warehouse in Texas, Amazon.com offered to build a new and larger warehouse, which, it said, would create 5,000 jobs, if the state provided a five-year sales tax exemption. However, the Texas legislators did not accept the offer, and Amazon.com is currently in the process of closing its warehouse, as reported by the New York Times.

The Alliance for Main Street Fairness (AMSF), a broad coalition of both small and large businesses, including the ABA, issued a statement on Wednesday, July 20, in response to Gov. Perry’s signing of the legislation instituting e-fairness in Texas. “We applaud Texas legislators for taking a stand to level the playing field for brick-and-mortar retailers in the state. With the passage of e-fairness legislation, Texas has sent an unmistakable message to Washington: it is time to fix online sales tax collection with a national solution,” said AMSF spokesperson Eric Bearse. “Main Street businesses that collect sales taxes, pay property taxes, employ local workers and invest in our communities should no longer be placed at a competitive disadvantage to online-only retailers. Texas has done its part in this debate. Now, Washington must step up to the plate.”