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Originally published June 7, 2011 at 5:20 PM | Page modified June 8, 2011 at 8:12 AM

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Amazon tells shareholders it will stand firm on sales taxes

Amazon.com Chief Executive Jeff Bezos left little doubt Tuesday that the company will stand its ground against efforts in many states to require the Internet giant to charge sales taxes on their behalf.

Seattle Times business reporter

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Amazon.com Chief Executive Jeff Bezos left little doubt Tuesday that the company will stand its ground against efforts in many states to require the Internet giant to charge sales taxes on their behalf.

"We think our position is a good one," Bezos said at Amazon's annual shareholder meeting in downtown Seattle. "And we'll stick with that."

Bezos also downplayed the possible threat to Amazon's edge against traditional stores if it's forced to collect sales taxes in more states. He noted that Amazon already does at least half of its business in places where it collects sales taxes or something similar, such as Europe's value-added tax.

Amazon long has argued that requiring Internet retailers to navigate the varied rules and rates of more than 7,500 local taxing jurisdictions would be too burdensome.

Bezos reiterated his support of federal efforts to minimize the many differences among states on sales-tax collection from Internet retailers. Asked by one shareholder to look ahead 10 years, Bezos said, "I believe we'll have the simplified sales-tax initiative passed."

"I hope it might happen much sooner than that," he added. "It's the right thing to do, and I think it would be great for Amazon."

The Supreme Court ruled in 1992 that Internet retailers do not have to collect a state's sales tax unless they have a local physical presence, such as a store. As a result, Seattle-based Amazon collects sales taxes in only five states: Kansas, Kentucky, New York, North Dakota and Washington.

Amazon has closed or threatened to halt construction of warehouses in Texas, Tennessee and South Carolina rather than give in to efforts to make it collect sales taxes, and it has severed business relationships in other states that passed new sales-tax laws.

The Alliance for Main Street Fairness, a retail coalition that includes Walmart, took out an ad in Tuesday's Seattle Times saying Amazon's stance hurts small businesses and local communities. The alliance argues that Amazon enjoys an unfair price advantage over traditional stores that must collect sales taxes.

For the past two years, Amazon has fought a surge of state legislative proposals that seek to make Internet retailers collect sales taxes by expanding the definition of "nexus," the legal term for physical presence.

These proposals declare that Internet retailers have nexus if they do business through local online affiliates, meaning blogs and other websites that link to products sold on Amazon. Since 2009, Amazon has cut ties with thousands of affiliates in such states as Illinois, North Carolina and Rhode Island.

Meanwhile, U.S. Sen. Dick Durbin, a Democrat from Illinois, is expected to introduce legislation that could put an end to untaxed online sales.

Alliance for Main Street Fairness spokesman Danny Diaz called Bezos' support of a federal solution "disingenuous and convoluted."

"They say they support federal legislation, but they're fighting tooth and nail to maintain exceptions in states across the country," Diaz said. "Their entire business model is based on sales-tax avoidance. They'll do everything and anything to maintain that advantage."

Separately, Amazon said stockholders rejected a proposal by Calvert Asset Management for more disclosure about how the company is dealing with climate change.

Calvert argued that more disclosure is needed because climate change could affect many parts of Amazon's business. Amazon opposed the measure, saying that preparing a climate-change report would not be "an efficient use of time and resources." The company did not give detailed voting results.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

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