Amazon Faces Court Battle on State Tax Records

In this Aug. 4, 2016, file photo, Amazon.com boxes are shown stacked near a Boeing 767 Amazon “Prime Air” cargo plane on display in a Boeing hangar in Seattle. (AP Photo/Ted S. Warren, File)

BOSTON (CN) – Taking a tax dispute with Amazon to court, Massachusetts regulators say the e-commerce behemoth cannot shield its records on third-party vendors.

Amazon has been collecting sales tax on all transactions, regardless which state originated the sale, since April 1, 2017, but this decision did not extend to the many third-party sellers that operate through Amazon’s website.

The Massachusetts Department of Revenue issued a directive days after the policy change, requiring out-of-state retailers to collect sales tax if they had more than 100 transactions in the state and collected at least $500,000 in revenue in 2016.

In order to collect on those taxes, however, the state must know what vendors are exceeding the transaction and revenue caps.

Massachusetts revenue officials sent Amazon their first records demand on Aug. 31, 2017, seeking information about all the third-party companies that do business through Amazon that have stored products in Massachusetts since 2012.

Giving Amazon three weeks to comply, the state also demanded federal identification numbers of in-state third-party vendors.

On Sept. 25, Massachusetts Revenue Commissioner Christopher Harding sued the online retailer in Suffolk Superior Court,

“Despite attempts to reach a satisfactory resolution to this matter, including three conference calls, as of this day, the defendants have not produced any of the documents requested,” the petition states. “The defendants have even states that they did not intend to produce any of the documents requested.”

Harding’s petition comes shortly after Amazon announced plans to open a second headquarters in North America. Massachusetts is among the states bidding on the opportunity. In a press release announcing the plan to build the new headquarters, the company said that the $5 billion new facility would take up 8 million square feet and employ about 50,000 people.

Amazon declined to comment.

Citing state law, Nathalie Dailida, the legislative director at the Massachusetts Department of Revenue, offered little insight as to the state’s challenge.

“The filings and requests are matters of public record,” Dailida said in an email. “Under state law, DOR may not comment further on any underlying tax matters related to these third-party vendors or any tax filers.”

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