• May 14, 2008

Texas is investigating whether online retailer Amazon must collect sales tax from state residents because a company subsidiary has used an in-state distribution center since 2006. Texas law provides that sellers who are engaged in business in the state must collect sales tax from state residents.

The Texas Comptroller's office says on its Web site that companies with a physical location in Texas, including a warehouse or distribution center, are considered engaged in business in Texas. But an Amazon spokeswoman said the company does not need to collect sales tax under Texas law. "We are in compliance with all laws in the state of Texas regarding sales tax," she said.

--Wendy Davis