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Amazon.com Sues Texas to get Sales Tax Audit

01.20.11

Amazon filed a lawsuit in Texas state court as part of its challenge of a $269 million claim for uncollected Internet sales taxes dating back to 2005 when Amazon opened operations in Texas. In September 2010 the Texas Comptroller of Public Accounts demanded the $269 million of Internet sales taxes, but refused to provide Amazon with the audit claiming that the audit was protected by attorney client privilege since the audit was prepared by an attorney. In December 2010 the Texas Attorney General agreed with the Comptroller’s claim of attorney client privilege leaving Amazon little choice but to file suit. It makes little sense to me why any company should not be able to see a sales tax audit whether the claim is $100 or $269 million, but the claim of attorney client privilege seems wrong since tax payers should be able to see tax audits. This will be an interesting case to watch as this appears to be a misuse of the attorney privilege. What do you think?

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