Arizona hits Amazon with $53 million tax bill
A regulatory filing discloses a tax dispute with another state.
Seattle Times business reporter
A little more than a year after Texas slapped Amazon.com with a $269 million tax bill, Arizona appears to be joining the national debate over whether the Seattle-based Internet retailer should collect sales taxes from its customers.
Amazon disclosed Wednesday it received a bill from Arizona in November for $53 million, what the state says the company owes in unpaid transaction taxes — Arizona's version of a sales tax — for nearly a five-year period.
"The State of Arizona is alleging that we should have collected a transaction tax that is similar to a sales tax on applicable transactions during those years," Amazon said in its annual 10-K regulatory filing. "We believe that the assessment is without merit and intend to vigorously defend ourselves in this matter."
The period for which Arizona is seeking unpaid taxes, plus interest, is March 2006 through December 2010. Amazon has four distribution centers in Arizona, putting its total footprint in the state at more than 4 million square feet.
The transaction tax, currently 6.6 percent, is "for all intents and purposes a sales tax," said Anthony Forschino, spokesman for Arizona's Department of Revenue. He declined to discuss the assessment against Amazon, citing taxpayer confidentiality laws.
In September 2010, Texas told Amazon the company owed $269 million for uncollected sales taxes over a four-year period. Amazon countered that Texas "did not provide a sufficient basis" for its decision, and the company closed a warehouse near Dallas last year.
The U.S. Securities and Exchange Commission began looking into Amazon's dispute with Texas last March and in November "staff notified us that it had completed its inquiry," the company said in Wednesday's filing. Amazon spokeswoman Mary Osako would not provide more comment.
Amazon charges sales tax in only a handful of states where it does business, citing a 1992 Supreme Court decision that says an Internet retailer does not have to collect a state's sales tax unless it has a local physical presence. Those five states are Kansas, Kentucky, New York, North Dakota and Washington.
In recent months, Amazon has made deals with other states, including California, to start collecting sales taxes at specified future dates, and it has thrown its support behind federal legislation that would put an end to untaxed online sales.
Separately, Amazon disclosed in the filing that daily-deal startup LivingSocial lost $558 million last year. Amazon, which invested $175 million in LivingSocial in late 2010, pegged its stake in the Washington, D.C.-based company at 31 percent. Amazon said LivingSocial had revenue of $245 million in 2011.
A main rival to Groupon, LivingSocial offers daily deals at local restaurants, retail establishments, hotels and events.
Amazon's stock closed Wednesday down $14.98, or 7.7 percent, at $179.46.
A day earlier, Amazon said fourth-quarter sales rose 35 percent from a year ago to $17.43 billion, while its profit slid 58 percent to $177 million.
Amy Martinez: 206-464-2923 or email@example.com