Amazon.com Sues Texas to get Sales Tax Audit
Amazon filed a lawsuit in Texas state court as part of its challenge of a $269 million claim for uncollected Internet sales taxes dating back to 2005 when Amazon opened operations in Texas. In September 2010 the Texas Comptroller of Public Accounts demanded the $269 million of Internet sales taxes, but refused to provide Amazon with the audit claiming that the audit was protected by attorney client privilege since the audit was prepared by an attorney. In December 2010 the Texas Attorney General agreed with the Comptroller’s claim of attorney client privilege leaving Amazon little choice but to file suit. It makes little sense to me why any company should not be able to see a sales tax audit whether the claim is $100 or $269 million, but the claim of attorney client privilege seems wrong since tax payers should be able to see tax audits. This will be an interesting case to watch as this appears to be a misuse of the attorney privilege. What do you think?
Yes, Texas not sharing the audit data with the accused seems bureaucracy at its most perverse.
Unless, it was meant to be a straw-man which would easily get knocked down in court and thus giving authorities the fig-leaf not to pursue the case.
Remember, it is hard to imagine authorities being unaware of the existence of this distribution center for 5 years and it was a vigilant reporter from the Dallas Morning News you blew the whistle and the authorities had no choice but to go through what might be charade of an audit.
Have you noticed how Amazon and its analysts were so nonchalant about this issue and it didn't even figure in the 3rd quarter conference call and appeared as a small-print footnote in the 10-K.
I think Texas wants to lose this fight but at the same time not rile up brick & mortar retail who have been incensed at this un-level playing field which has dismembered Circuit City and is hollowing out big-box retail.