Bill adds taxes — and takes them away
Provisions exempt small businesses, tell Amazon.com to collect local levies
Texas companies with less than $1 million in annual revenues will continue to be exempted from the state business tax for another two years.
Online retail giant Amazon.com must add Texas state and local sales taxes to purchases by Texas customers starting Sept. 1 if the giant online retailer still operates a distribution center in the state on that date.
Both provisions were part of Senate Bill 1 that was approved Tuesday by the Texas Legislature before ending its special session Wednesday.
The $1 million exemption on the business tax was due to expire next year with the exemption falling to annual revenues of $600,000 or more. The $1 million exemption now will expire in 2014.
About 28,000 Texas companies have annual revenues of between $600,000 and $1 million, according to the National Federation of Independent Business/Texas, which lobbied for the two-year extension.
The revenue-based business tax started in 2007 with a $300,000 exemption. In 2009, the exemption was raised to $1 million to reduce the number of companies that had to pay even if they lost money during the tax year.
"This exemption helps not only small businesses struggling to keep their doors open, it encourages the entrepreneurs who are trying to get their businesses off the ground," said Will Newton, NFIB/Texas executive director.
NFIB/Texas a month ago said its priority for the 2013 regular legislative session will be repealing the revenue-based tax and replacing it with some form of profits-based tax formula.
Online provision
Another provision in Senate Bill 1 sets in state law the online tax collection policy of the Texas Comptroller of Public Accounts. The provision establishes that online merchants must collect state and local sales taxes from Texas customers if the company owns at least 50 percent of a business in Texas.
Seattle-based Amazon.com owns a distribution facility in Irving, which would require the company to collect sales taxes from Texas customers under the new law, set to go into effect Sept. 1.
It was unclear Thursday whether the Irving facility was still in operation. Amazon.com announced earlier in the year it would close the distribution center on April 15. Media reports after that date said the facility was still in operation. Amazon.com did not have a telephone listing on Thursday, and a call to the Amazon.com media hot line was not returned.
Texas Comptroller Susan Combs already has billed Amazon.com $256 million for back sales taxes based on purchases between 2005 and 2009. The back-taxes matter has not yet been resolved.
At one point, Amazon.com offered to invest $300 million in five or six warehouse and distribution centers in the state, employing 6,000 people, if lawmakers would let the company operate for four-and-a-half years without collecting sales taxes from its customers.
Language to accept such an offer was never allowed into Senate Bill 1.
The effect of the provision in Senate Bill 1 is to add Amazon.com to the list of other retailers that collect sales tax for online purchases, like Walmart, Best Buy and Target, said Eric Bearse, an Austin spokesman for the Washington-based Alliance for Main Street Fairness. Those retailers are based out of state but operate stores in Texas.
On to Perry
Gov. Rick Perry already vetoed a bill passed during the regular session meant to force Amazon.com to collect sales taxes in Texas. A fiscal note on the regular-session bill estimated that tax revenues would rise by $16 million over the next two years if the proposal became law.
Perry must either enact Senate Bill 1, which contains numerous other provisions necessary for the state to balance its budget, or veto it.
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