theodp writes "According to the WSJ, new questions are being raised about an audacious legal strategy Amazon.com has used to avoid collecting sales tax in eight states where it has warehouses or distribution centers. Despite operating hundreds of thousands of square feet of distribution facilities in the eight states, Amazon says it doesn't have any presence in them, arguing that it doesn't operate the plants — its wholly owned subsidiaries do. The law allows companies to set up subsidiaries that are legally separate entities, but courts can reject 'shell companies' whose sole function is to help avoid a tax obligation. The Journal notes that founder Jeff Bezos said in 1996 that he started the company in a small state, Washington, to avoid the sales tax consequences of larger states."
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