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Brick-and-Mortar Retailers Take the Fight to Amazon

By on 11.5.11 | 8:54AM

Amazon.com has been targeted by state legislatures across the country as a source of potential tax revenue, and there's now a lawsuit in Indiana being filed by brick-and-mortar retailers against the state because they have chosen not to go this route.

Shopping mall giant Simon Property Group sued the Indiana Department of Revenue on Thursday to try to force it to collect taxes from Amazon.com Inc. for all sales made in the state.

Online retailers are not required to pay sales taxes to state legislatures if they do not own and operate physical stores. Amazon does have affiliate distribution centers in Indiana, and those relationships could be jeopardized with a ruling in Simon Property's favor. The online retailer has cut ties with centers in Colorado, Alabama, North Carolina, Connecticut, Rhode Island and neighboring Illinois as a result of attempts to collect taxes in this manner.

Indianan Republican legislator Luke Kenley was quoted as estimating that Indiana stood to make $400 million in tax revenue every year if the state collected taxes from Amazon. What would actually happen, as happened in Illinois, is that Amazon would cut ties with their distribution centers in the state, Indiana will lose jobs and would not see a cent in increased revenue.

TheStreet.com has a good roundup of the nationwide state-based internet tax fight.

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