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Amazon settles sales tax controversy with Texas

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Seattle—Amazon.com, at the center of an ongoing battle over the collection of sales tax by out-of-state online retailers, has struck a deal with Texas, agreeing to increase its in-state presence and collect sales tax on items sold to Texas residents. Amazon has been fighting Texas' assessment of a $269 million sales tax bill for online purchases made from 2005 to 2009. The new deal—in which Amazon will open distribution facilities in the state, hire an estimated 2,500 workers and on July 1, begin collecting sales tax on online purchases by Texas residents—quashes the disputed tax bill. A drawn-out battle against collecting sales tax on Internet purchases—generally with Amazon at its core, and supported by the Direct Marketing Association—has had an up and down history. This month, DMA succeeded in blocking enforcement of a Colorado law requiring out-of-state e-commerce businesses to report residents' purchases to the state so that it can collect sales tax. However, as with the Texas deal, Amazon capitulated last fall with California and will start collecting state sales tax in September.
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