AUSTIN, Texas – Online retail giant is closing a suburban Dallas distribution center and scrapping plans to expand Texas operations after a dispute with the state over millions of dollars in sales taxes, an executive informed employees Thursday in an e-mail obtained by The Associated Press.

Dave Clark, Amazon’s vice president of operations, writes in the e-mail that the center will close April 12 due to Texas’ “unfavorable regulatory climate.” It was not immediately clear how many employees work at the facility.

The Texas comptroller’s office last year demanded $269 million in uncollected sales taxes from Amazon. The company subsequently filed a lawsuit against the state, demanding it produce the audit that generated the figure.

The state contends is responsible for sales taxes not collected on online sales in Texas.

Allen Spelce, a spokesman for Texas Comptroller Susan Combs, said Texas loses an estimated $600 million in Internet sales taxes every year.