Morning Joe   |  May 23, 2013

Why Amazon is pushing back against sales taxes

Online retailer Amazon has refused to collect sales tax from most of the country, but in May the Senate stepped in to close that loophole. So why is Amazon supporting a bill it should seemingly be against? Fortune's Andy Serwer discusses.

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This content comes from Closed Captioning that was broadcast along with this program.

>> yes.

>> it is.

>>> we move to "fortune" cover. amazon not so secret war on taxes. tell us about it, andy.

>> we have been learning about apple and its tax strategy this week with tim cook testifying in front of congress. amazon is another issue but also a multibillion dollar tax situation. there are estimates that 11.4 billion dollars states have not collected the past couple of decades and a large portion of that is from amazon . you probably know that if you buy things online, you don't have to pay sales tax right. item.

>> in your state, in many states if that company doesn't have a physical presence in your state. amazon has gone to great lengths to try to avoid collecting sales tax . there are 45 states that have sales tax and only collects in about 17 of those states. in many cases, it does have a physical presence in terms of large warehouses, but it set up these warehouses in separate subsidiaries. does this sound familiar?

>> yes.

>> apple. these separate subsidiaries and claiming therefore it's a separate subsidiary it's not part of amazon and therefore it doesn't have to collect taxes . a state official in texas presented amazon with a bill for $269 million that it said the company owed to the state of texas . the company decided -- amazon decided to pull its warehouse out of texas and trying to settle back and forth in indiana and south carolina .

>> do they feel they need to pay that?

>> they have now settled but they have now decided to set up warehouses and money sort of gets circulated back.

>> they are moving.

>> this has been an issue since the dawn of the web. the issue of collection of sales taxes has allowed people to get into businesses they couldn't have gotten in before but a question when would this be resolved? at some point the piper has to get paid. what do we all have to start paying sales taxes ? what is the regime that will govern it?

>> the states have tried to organize themselves and get together and tried to work with walmart and best buy and big box stores but different agendas and unable to agree. it looks like a national law in congress that will mandate that all internet companies will have to start collecting sales tax but amazon is pushing back and other companies well like ebay are pushing back on it and it's creeping slowly but i think the next couple of years you'll see a national law that will affect that particular point.

>> andy, thank you. that is fascinating. the new issue of "time", rick steng stengel, is "16 minutes." we will be looking for "fortune" cover story.

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