Fresno business files lawsuit claiming Amazon owes billions in back taxes

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FRESNO, California.- Horn Photo Owner Stan Grosz filed a lawsuit last week against the California Department of Tax and Fee Administration (CDTFA) claiming Amazon owes billions of dollars in back taxes.

The lawsuit states Amazon did not collect sales tax for the last 3 to 8 years regarding the company’s Fulfilled by Amazon Program, which allows third-party sellers to send merchandise to the company to be housed and then sold through Amazon’s website.

During this process, Amazon did not collect state sales tax because the company said it was a market place and not a seller.

Grosz said because of the evolution of technology and consumers being able to not pay a sales tax his business has suffered over the years.

“I have always been irritated with how hard my staff has had to work to compete with online,” said Grosz. “Everyday we would have people want to see a camera, touch a camera, look at a camera, and leave and buy it on their phone because they didn’t have to pay sales tax.”

Amazon declined to comment on camera but sent this statement: “Amazon collects sales tax in every jurisdiction in which we’re required to by law,” claiming the company acted as the middle man in the sale and not the direct seller.

However, Grosz and his attorney disagree due to California Regulation 1569 which states:

“A person who has possession of property owned by another, and also the power to cause title to that property to be transferred to a third person without any further action on the part of its owner, and who exercises such power, is a retailer when the party to whom title is transferred is a consumer. Tax applies to his gross receipts from such a sale.”

California State Treasurer Fiona Ma agrees and states Amazon is a retailer and should be responsible for the back taxes from the last 3-8 years. However, instead, she said in a letter to Governor Gavin Newsom that CDTFA is issuing notices to the third party businesses to pay back the billions in uncollected sales tax.

CDTFA declined to comment due to pending litigation. The state will have 30 days to respond once served.

This is the first case like this in California but similar lawsuits have been filed across the county.

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