ILNews

Simon sues state over Amazon sales tax exemption

Back to TopCommentsE-mailPrintBookmark and Share

A Marion Superior lawsuit is accusing Indiana of violating the state constitution by not collecting sales taxes from Amazon.com Inc.

On behalf of Indianapolis-based Simon Property Group Inc., law firm Cohen & Malad filed the suit Thursday against the Indiana Department of Revenue in an attempt to force the state to collect sales taxes from the online operations. The mall powerhouse claims the state's "illegal and unconstitutional" decision to exempt Amazon from sales-tax collection gives the giant online retailer "an unfair advantage in the market."

Specifically, the suit asks the court to mandate that the state’s revenue department issue an assessment to Amazon for unpaid gross retail taxes and use taxes, as well as interest and penalties. One of the counts alleges not collecting those taxes amounts to a violation of Article 1, Section 23 of the Indiana Constitution that prohibits disparate treatment of citizens – in this case, Amazon’s online operations here versus the other merchants required to pay the taxes.

“Defendants have failed and refused to comply with their statutory duties to issue such assessments, despite demand,” the suit says. “Their failure, without legislative authority, illegally and unconstitutionally exempts Amazon from the obligations to collect Indiana Gross Retail Tax and Use Tax, despite the fact that Amazon sells hundreds of millions of dollars of taxable goods to Indiana residents with many of those sales taking place wholly within Indiana every year.”

The suit cites a study by professors at the University of Tennessee that estimates Indiana will forego about $195 million in revenue in 2012 alone by failing to compel out-of-state retailers like Amazon to collect sales taxes.

Simon earlier had requested that the state begin collecting sales taxes on purchases made from within the state's boundaries on Amazon.com. Online retailers typically are required to collect sales taxes on purchases from within states where they have a physical presence, but Indiana has not forced the issue with Amazon.

The decision by Indiana officials to take a kid-glove approach was an important factor in Amazon's decision to open four local distribution centers that employ thousands of Hoosiers. Of course, traditional retailers employ many thousands more.

Amazon has faced pressure in most of the states where it operates to collect sales tax, particularly as state coffers dried up during the recession. Some states have been hit with lawsuits, as well as threats that distribution centers would be removed from those locations.

To help lure Amazon to Indiana, the state in 2007 repealed a law requiring companies that didn’t maintain a place of business in the state — but had affiliated locations — to get a retail merchant’s certificate, subjecting them to the same tax-collection duties as brick-and-mortar shops. Amazon now has three distribution centers in the state and has announced plans to open a fourth.

Gov. Mitch Daniels’ administration — as well as Amazon officials — have advocated a federal solution to address the issue. Key fiscal leader Sen. Luke Kenley, R-Noblesville, has been at the forefront of efforts to get a federal law requiring online sales-tax collections. Kenley, who spent two days in Washington, D.C., this week discussing the matter with federal lawmakers, is among those who are hopeful the issue could get traction in Congress this year.

Both House and Senate bills have been filed, and a bipartisan group of senators, including Illinois Democrat Dick Durbin and Wyoming Republican Mike Enzi, intend to introduce a bill on the issue early next week, Kenley said. They’re also tentatively planning a Nov. 30 hearing on the issue.

Kenley said Friday that he’s not inclined to support a state solution, which Sen. John Broden, D-South Bend, said he intends to introduce during the next legislative session. Broden had tried to insert a similar measure into the budget bill during the 2010 session.

Aside from what happens at the state legislative and Congressional levels, the issue could ultimately play out in courtrooms and pave the way for the Supreme Court of the United States to revisit this sales tax issue as it involves online operations. In Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the court held that a business must have a physical presence in a state for that state to require it to collect sales tax. Although it didn’t specifically address the Internet at that time, the holding effectively has barred states from collecting sales taxes from most online operations.

 

ADVERTISEMENT

  • interesting story and suit
    I dont see any standing, first off. How does any one person have standing to sue over tax collection policy that is an executive function. Also: people dont just avoid malls now because of the sales tax issue, they avoid them because they are symbols of reckless capitalist over development of former farmlands that now are reduced to concrete lots and cheap but gaudy dens of commodity idolatry. A little bit of sales tax wont slow the malls decline.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. State Farm is sad and filled with woe Edward Rust is no longer CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go All American Girl starred Margaret Cho The Miami Heat coach is nicknamed Spo I hate to paddle but don’t like to row Edward Rust is no longer CEO The Board said it was time for him to go The word souffler is French for blow I love the rain but dislike the snow Ten tosses for a nickel or a penny a throw State Farm is sad and filled with woe Edward Rust is no longer CEO Bambi’s mom was a fawn who became a doe You can’t line up if you don’t get in a row My car isn’t running, “Give me a tow” He had knowledge but wasn’t in the know The Board said it was time for him to go Plant a seed and water it to make it grow Phases of the tide are ebb and flow If you head isn’t hairy you don’t have a fro You can buff your bald head to make it glow State Farm is sad and filled with woe Edward Rust is no longer CEO I like Mike Tyson more than Riddick Bowe A mug of coffee is a cup of joe Call me brother, don’t call me bro When I sing scat I sound like Al Jarreau State Farm is sad and filled with woe The Board said it was time for him to go A former Tigers pitcher was Lerrin LaGrow Ursula Andress was a Bond girl in Dr. No Brian Benben is married to Madeline Stowe Betsy Ross couldn’t knit but she sure could sew He had knowledge but wasn’t in the know Edward Rust is no longer CEO Grand Funk toured with David Allan Coe I said to Shoeless Joe, “Say it ain’t so” Brandon Lee died during the filming of The Crow In 1992 I didn’t vote for Ross Perot State Farm is sad and filled with woe The Board said it was time for him to go A hare is fast and a tortoise is slow The overhead compartment is for luggage to stow Beware from above but look out below I’m gaining momentum, I’ve got big mo He had knowledge but wasn’t in the know Edward Rust is no longer CEO I’ve travelled far but have miles to go My insurance company thinks I’m their ho I’m not their friend but I am their foe Robin Hood had arrows, a quiver and a bow State Farm has a lame duck CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go State Farm is sad and filled with woe

  2. The ADA acts as a tax upon all for the benefit of a few. And, most importantly, the many have no individual say in whether they pay the tax. Those with handicaps suffered in military service should get a pass, but those who are handicapped by accident or birth do NOT deserve that pass. The drivel about "equal access" is spurious because the handicapped HAVE equal access, they just can't effectively use it. That is their problem, not society's. The burden to remediate should be that of those who seek the benefit of some social, constructional, or dimensional change, NOT society generally. Everybody wants to socialize the costs and concentrate the benefits of government intrusion so that they benefit and largely avoid the costs. This simply maintains the constant push to the slop trough, and explains, in part, why the nation is 20 trillion dollars in the hole.

  3. Hey 2 psychs is never enough, since it is statistically unlikely that three will ever agree on anything! New study admits this pseudo science is about as scientifically valid as astrology ... done by via fortune cookie ....John Ioannidis, professor of health research and policy at Stanford University, said the study was impressive and that its results had been eagerly awaited by the scientific community. “Sadly, the picture it paints - a 64% failure rate even among papers published in the best journals in the field - is not very nice about the current status of psychological science in general, and for fields like social psychology it is just devastating,” he said. http://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results

  4. Indianapolis Bar Association President John Trimble and I are on the same page, but it is a very large page with plenty of room for others to join us. As my final Res Gestae article will express in more detail in a few days, the Great Recession hastened a fundamental and permanent sea change for the global legal service profession. Every state bar is facing the same existential questions that thrust the medical profession into national healthcare reform debates. The bench, bar, and law schools must comprehensively reconsider how we define the practice of law and what it means to access justice. If the three principals of the legal service profession do not recast the vision of their roles and responsibilities soon, the marketplace will dictate those roles and responsibilities without regard for the public interests that the legal profession professes to serve.

  5. I have met some highly placed bureaucrats who vehemently disagree, Mr. Smith. This is not your father's time in America. Some ideas are just too politically incorrect too allow spoken, says those who watch over us for the good of their concept of order.

ADVERTISEMENT