EcommerceBytes-NewsFlash, Number 2982 - January 18, 2013     2 of 5

IRS: Amazon Owes US $234 Million

By David A. Utter

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When it comes to waking someone up in a hurry, there are few things that do the job better than a pot of coffee, and a letter from the taxman certainly resides near the top of that list. Especially when that letter says please pay the sum of $234 million in unpaid taxes.

Amazon sellers dealing in electronics and feeling the bite of higher fees in that category may be cynically wondering if that rise in costs has anything to do with the lawsuit Amazon has filed against the IRS. At issue according to Reuters: alleged unpaid international taxes from 2005 and 2006.

Amazon received notice in November 2012 of the unpaid taxes amounting to $234 million. Taxes aren't a new issue for Amazon or its shareholders, who were alerted in 2011 that Amazon may be on the hook for $1.5 billion in additional taxes.

However, Amazon believes the IRS isn't valuing intangible property correctly. The IRS contends tax payments made from Amazon's units in Europe to the parent US company were too low.

It's not a new battle for the IRS. Back in 2010, Veritas (now part of software firm Symantec) managed to escape a similar attack by the IRS. Law firm Baker & McKenzie contended the IRS method of determining Veritas owed over a billion dollars was "arbitrary, capricious, and unreasonable." The US Tax Court agreed, and the IRS backed off their claim.

Jeff Bezos and company at Amazon likely hope for a similar outcome with their current IRS faceoff.

About the author:

David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. Send your tips to and find him on Twitter @davidautter and on LinkedIn.

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