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and state legislatures, agreeing to collect sales taxes in several states despite its longstanding protestations that states had no legal right to force the issue.

Mapping out taxes

Taxes were on Jeff Bezos' mind right from the beginning of Amazon.

He once told an interviewer he'd thought about founding his Internet bookseller startup on a California Indian reservation to escape taxes. When that proved impractical, Bezos settled on Seattle, in part because Washington's relatively small population effectively would leave more Amazon sales untaxed.

For more than a decade, Amazon has aggressively resisted individual state efforts to require sales-tax collections, citing a 1992 Supreme Court ruling that said businesses with no physical presence, or "nexus," such as a retail store, in a state cannot be required to collect sales tax.

That ruling, in Quill Corp v. North Dakota, came in the case of a mail-order catalog. But it has been applied to online retailers, creating an ever-expanding loophole in sales-tax collections as more purchases are made over the Internet.

Technically, customers who buy goods online are required to pay their state's sales tax, but it almost always goes unpaid if Amazon or other online retailers do not add it to their bills. In Washington state, where Amazon does collect sales tax, the state estimates it will lose $446 million next year from untaxed sales through other out-of-state Internet retailers.

In a May interview with Consumer Reports, Bezos said Amazon plays by the same rules as other companies, and it is up to Congress to fix the problem. "I don't think our customers would say, 'Why don't you guys just optionally collect the tax? I know you aren't required to do it, but aah, go ahead!' " he said.

Even as it has expanded nationally, the company has operated its warehouses and Kindle research lab in legal subsidiaries -- arguing those facilities do not count for sales-tax purposes.

"They are corporately separate and [Amazon's] retail business is not the parent," Misener said.

According to confidential internal documents, Amazon also has tightly restricted employee travel to avoid taxes, instructing workers to beware of working in states where their presence might trigger tax liability.

The company has handed out a color-coded U.S. map to employees, ranking states from "green" for the safest destinations, to "red" for those that pose a "significant risk" requiring special approval to visit.

The company's map and travel policy were first disclosed by The Wall Street Journal in August. The Seattle Times obtained copies of the maps and related documents from court filings in a lawsuit brought against the company by a former Amazon software engineer.

In one internal memo, Amazon talked up the need for vigilance, noting the economic downturn has caused states "to become more aggressive and more focused" on Amazon's tax treatment, a trend "which could expose our business to significant tax costs."

Amazon's efforts to avoid collecting sales taxes are defensible in states where it truly has no physical presence, said David Brunori, professor of public policy at Georgetown University and contributing editor to State Tax Notes magazine. "There is nothing irrational or evil about that," he said.