Amazon asks Supreme Court to settle tax battle

Amazon is taking a fight over sales tax in the state of New York to the US Supreme Court.

The online retail giant has petitioned the court, arguing that its customers in New York should not have to pay sales tax because its operations in the state are not substantial enough to justify the charges.

Under a 1992 Supreme Court ruling, online retailers are not required to collect sales tax in states where they do not have a physical presence. Due to a state law they are currently required to collect the tax because New York-based websites carry Amazon advertisements.

Amazon insists that it does not have a physical presence in New York, although the company’s website does in fact list New York City as one of its office locations.

Observers have also questioned the move as Amazon currently pay sales tax in other states and have made no attempt to appeal. Jason Brewer of the Retail Industry Leaders Association, a bricks-and-mortar lobby group that has pushed for online sales tax, told the Financial Times, “It is puzzling that Amazon would choose to collect sales taxes in states like California, Texas and Pennsylvania to name just a few while litigating in New York.”

It has also been revealed that Amazon has hired prominent conservative lawyer Ted Olson, the former US solicitor general who this year fought for the Supreme Court to overturn California’s ban on same sex marriage, to fight its corner.

Amazon has been heavily criticised for tax avoidance in the past. In the last tax year, Amazon UK paid £2.4m in corporation tax, despite making £4 billion in sales.

A report by the House of Commons’ public accounts committee, published in 2012, included Amazon, alongside big name brands such as Starbucks and Google, on a list of firms exploiting tax loopholes.

“Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here”, Margaret Hodge MP, chair of the committee of public accounts, said at the time.

“This is outrageous and an insult to British businesses and individuals who pay their fair share.”

Further reading:

 Apple, ExxonMobil and McDonalds among sustainability ‘laggards’ in new research

Google, Amazon, etc: blame tax laws, not the taxman or taxpayer

Corporations and tax avoidance: the time is right for investors to push for change

Charities used in offshore tax avoidance cam

MPs deem global companies’ tax avoidance as ‘an insult to British businesses’