published Friday, August 12th, 2011

Haslam wants new tax deal with Amazon

Katherine Braun sorts packages toward the right shipping area at an Amazon.com fulfillment center in Goodyear, Ariz., in this Associated Press file photo. Some Tennessee lawmakers object to Amazon not paying sales taxes on products that will be shipped from its Hamilton and Bradley fulfillment centers.
Katherine Braun sorts packages toward the right shipping area at an Amazon.com fulfillment center in Goodyear, Ariz., in this Associated Press file photo. Some Tennessee lawmakers object to Amazon not paying sales taxes on products that will be shipped from its Hamilton and Bradley fulfillment centers.

NASHVILLE — Gov. Bill Haslam’s efforts to negotiate a “new relationship” with Amazon on state sales-tax collections is drawing a mixed response among Southeast Tennessee lawmakers but producing cheers from one of the Internet retailing giant’s biggest critics.

“No one from the governor’s office has spoken to me concerning this issue at all,” said Rep. Eric Watson, R-Cleveland, who represents a portion of Bradley County where one of two Amazon distribution centers is being built. “I don’t understand really what the governor says when he says that.”

Haslam was quoted Thursday by The Tennessean newspaper as saying he wants to resolve ongoing controversies about Amazon’s tax status when it comes to collecting sales taxes on purchases made by its Tennessee-based customers.

The governor has previously said he backed the agreement struck by his predecessor, Phil Bredesen, in which Amazon would not have to collect such taxes if the company built the warehouses in Bradley and Hamilton counties.

Internet retailers can’t be compelled to collect sales taxes if they have no physical presence in a state, under a 1992 U.S. Supreme Court decision. Critics argue the Amazon retail centers constitute enough physical presence, an argument Tennessee Attorney General Bob Cooper has said has merit.

In his comments, Haslam said, “We’d like to work out some arrangement that works for them to stay and grow in Tennessee and yet for us to collect the sales tax that we need. ... We would hope to do something prior to the legislature coming back” in January.

Haslam spokesman David Smith on Thursday rejected questions about whether the governor is flip-flopping and trying to renegotiate a previously agreed-to deal.

“I’d say he’s negotiating a new relationship in the context of a potential expanded presence,” Smith said Thursday evening, referring to Amazon’s announcement last month it is leasing space just outside Nashville in Lebanon to open a 500,000-square-foot “fulfillment center.”

Amazon already plans to hire about 1,200 full-time workers and more than 2,000 part-timers at the Enterprise South industrial park site in Hamilton and the other center in Bradley.

The previously struck Bredesen deal has touched off legislative and legal threats from critics.

House Majority Leader Gerald McCormick, R-Chattanooga, in whose district the other Amazon center is going, said he spoke with the governor earlier this week.

McCormick’s take on what’s under discussion is getting Amazon to agree that its exemption from sales-tax collections would be temporary, lasting several years instead of permanently.

He noted Amazon already backs resolving the entire Internet taxation issue at the federal level. That could be be pushed during the time Amazon is exempt from collecting state sales taxes.

If Amazon supports that, McCormick said, he could go along with it. Doing so would benefit Amazon, ending any number of woes the company faces in Tennessee, the House leader suggested.

“They’re not in the business of legislative battles and legal battles,” McCormick said, alluding to legislative efforts this past session to force the company to collect sales taxes and threats by traditional retailers to sue if the company doesn’t. “They’re in the business of selling things.”

If Amazon supports that, McCormick said, he could go along with it. And if Amazon isn’t?

“I think we stick to the deal that we made; we don’t break the deal,” McCormick said. “But I don’t think we’ll have to. I think they’re a good corporate citizen and want to come to a conclusion on this so that it’s no longer a distraction to them or the legislature or the governor.”

Amazon spokeswoman Mary Osako did not respond to two e-mails Thursday about the issue.

Sen. Andy Berke, D-Chattanooga, was surprised by the governor’s comments. He said that when it comes to economic development, “it’s critical that we keep our word. And if we don’t, we look like a banana republic.”

But Berke said if Haslam reaches a deal with Amazon, “then that’s their [the company’s] prerogative. We just want to make sure that we don’t jeopardize jobs and future economic development opportunities through our legal actions.”

The Alliance for Main Street Fairness, a national coalition of brick-and-mortar retailers including Wal-Mart, is hounding Amazon across the nation on the sales-tax collection issue. The group says it puts their members at a competitive disadvantage because their members still have to collect sales taxes.

“We appreciate Gov. Haslam’s understanding that it is harmful to Tennessee and unfair to local businesses for one online-only retailer to get a special deal that exempts them from collecting sales taxes rightfully owed to the state,” said Mike Cohen, a Knoxville-based spokesman for the group. “Tennessee retail businesses that collect sales taxes 365 days a year should not have to wait even one day longer to compete on a level playing field with Amazon.com.”

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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Fuzzy said...

I campaigned/voted for/actively supported Bill Haslam for the Governor's job, and I think he will be a great one ... BUT ... I couldn't disagree with his action on this matter more. A deal is a deal, and he should in no way interfere at this juncture.

August 12, 2011 at 12:40 a.m.
328Kwebsite said...

Our word is that we charge all businesses sales and use tax. Further, every individual in this state is responsible for reporting their purchases if we do business in commercial amounts, regardless of what the stores do on their end.

They have probably already decided what they are going to do. Amazon is already announcing the opening of two Chattanooga distribution centers to its vendors. This is a done deal, and they are just now getting around to breaking the news to us. Amazon says business starts in September.

August 12, 2011 at 1:41 a.m.
dfclapp said...

I can't imagine what would induce a new Governor to advertise duplicity by crowing about a bait and switch deal. What would it say to any other large business Tennessee might want to entice? It is clear that pure retailers don't want legislators to see a difference between those selling directly to consumers and those who provide distribution centers, but jealousy will gain whatever support it can. As one who also voted for Gov. Haslam, I hope that a clarification from him will speak well about the character of our state government.

August 12, 2011 at 5:19 a.m.
Astropig said...

I recently did an extensive remodeling of my kitchen. I ordered the appliances from Amazon and because of their not being any sales tax ,I saved well over $300. That was money that I spend buying other things that I needed for the job instead of sending it to the government for them to attempt to buy votes with it and essentially flush it down the drain. WalMart is just mad that I did not spend it with them.

August 12, 2011 at 6:10 a.m.
insidepitch said...

The Governor must have discovered that Amazon is competing with products that Pilot is selling. I voted for him, but if he screws up the Amazon deal I will work hard against him.

August 12, 2011 at 6:43 a.m.
bbchil said...

How about Tennessee just settles for all the additional sales tax income it will receive from PURCHASES MADE BY PEOPLE WHO HAVE JOBS because of Amazon?

August 12, 2011 at 7:58 a.m.
Facts said...

Well. All the "business people" promised we were getting an "experienced" businessman. This shows you can lie about your experience and it ends up embarrassing you and putting others at risk. Bill Haslam is no businessman, like too many others who make false claims. This real business owner is going to work against him & all his smart buddies who chase off jobs.

August 12, 2011 at 8:54 a.m.
LibDem said...

Astropig, you didn't save $300 in tax. You evaded the tax. There's a difference. How much do you 'save' when you file your income tax return?

August 12, 2011 at 10:46 a.m.
eastridge8 said...

I think Haslam should honor the deal with Amazon...we should keep our word....employees will spend, Spend, SPEND their money!

August 12, 2011 at 10:54 a.m.
DealWithIt said...

LibDem, only commercial accounts are required to report sales tax on items not already collected, not personal accounts. Are you going to lead us to believe you report your sales tax for every item on eBay, Amazon, Craigslist or elsewhere that you purchase from your personal bank account? If you do that, and you also believe taxes are too low in this country, I want to hear how you also send extra money to government every year above what you owe on your federal/state tax forms.

August 12, 2011 at 11:07 a.m.
MountainJoe said...

A deal is a deal. TN made a deal, for better or worse, and must live up to it if we ever want another company to locate here and provide jobs.

August 12, 2011 at 11:17 a.m.
SavartiTN said...

The taxes that they will collect from Amazon is a drop in the bucket compared to the money that the city and the state gave Volkswagon to come here. Why are they picking on Amazon? Is the government not wanting to put hundreds of people to work?

This is all over jealous legislators who didn't get Amazon in their community and the always bullying WalMart.

When Amazon picks up and moves out of here...which they probably will...explain that to the couple of thousand people who will lose their jobs.

Lawmakers, my butt. They are a bunch lawbreakers as far as I am concerned.

August 12, 2011 at 11:32 a.m.
LibDem said...

DealWithIt, the form is SLS452 and is available on the Tn. Dept.of Revenue site. And, yes, I file this each year. It's the law.

I won't reveal quite what I do on other tax returns. My signature certifies accuracy. I will assure you there is no underpayment.

August 12, 2011 at 11:40 a.m.
Astropig said...

"Astropig, you didn't save $300 in tax. You evaded the tax. There's a difference. How much do you 'save' when you file your income tax return?"

Nope. I followed existing law.Just like treasury secretary Timothy Geithner.Tax dodgers are fine as long as they are the right tax dodgers,no? Even with shipping ,I saved money over the price locally (I shopped there first). The trucking company cheerfully dollied the stuff into my house.I installed it myself.

You seem angry that I kept that money instead of handing it to the government ,where it would make a brief stop and then get mailed to the same kind of people that steal air conditioning units out of schools. Too bad for you ,I guess.I spent it on other items needed for my kitchen,thus providing real jobs for the people that made the items.The low lifes that live on the hard work of others didn't get that $300,the workers at their job did !

August 12, 2011 at 11:45 a.m.
LibDem said...

Astropig, I'm not angry as much as disappointed that jurisdictions place laws on the books with no intention to enforce. The average resident of Tennessee is unaware because the State doesn't publicize. If I recall correctly, compliance with sales/use tax self-reporting is about 2%. (Please don't quote me on that.)

I can rationalize a little and say that if the State doesn't care, why should you?

August 12, 2011 at 12:16 p.m.
SavartiTN said...

I am curious...doesn't Georgia have a lower sales tax rate than Tennessee? Do they collect taxes on those who buy in Georgia like at...say...Costco but live in Tennessee?

August 12, 2011 at 12:52 p.m.
SavartiTN said...

Well, my take on this is that I will still use Amazon even if they collect taxes from me. It is the convenience of sitting at home and shopping then having it delivered to my door...in two days no less. WALMART...I DON'T SHOP YOU FOR A REASON AND IT HAS NOTHING TO DO WITH TAXES.

After a special hearing in May this year, this statement was made:

"Why can't Amazon come clean and provide lawmakers with details of the special deal they have claimed to secure with the Department of Revenue," asked Mike Cohen, spokesman for the Alliance for Main Street Fairness (AMSF) in Tennessee. "Secret, backroom deals would hurt Main Street jobs and give an out-of-state company a competitive advantage over mom-and-pop shops across our state. Main Street businesses want to know: what Amazon is trying to hide?"

The real question is why the Alliance for Main Street Fairness makes it so hard to find out who is backing them...but I have. WalMart hired Terry Nelson...the same person that has been directly linked to a couple of major Republican scandals and was the creator of that ad against Harold Ford, Jr. Read about here: http://www.huffingtonpost.com/al-norman/walmart-welcomes-back-dir_b_865954.html

And here are some of the folks that want all of you all ready over burdened tax payers to pay MORE taxes...Alliance for Main Street members include large retail corporations such as AutoZone, Best Buy, Home Depot, Sears, Target, and Wal-Mart. Additional members include Bella Linea, Belle Meade Jewelry and Repair, the Blooming Boutique, the Beveled Edge, bliss, Brentwood Flower Shoppe, Cedar Sprints Christian Stores, Corner Music, Curious Gourmet, Disc Exchange, Healing Home, the Fabric Market, Fuzzwig's Candy Factory, Granny's Flower Shop, Gran Fondo, Logos Bookstore, Mahoney's, My Sister's Closet, Pro Audio Solutions, Nashville Boot Company, Nostalgia, Organized Play, Sites Jewelers, Shuff's Music and Piano Showroom, Valpak, Village, and Ward Potts Jewelers.

I suppose we all have to ask ourselves why would an organization campaign to make the average guy pay more taxes and possibly drive out a company who will hire hundreds of locals.

Petty arguing only distracts us from the real problem. It would be nice if people would focus.

August 12, 2011 at 1:15 p.m.
LibDem said...

SavartiTN, This is indeed a battle among large corporations. The average guy on the street has a horse in the race but no rider.

However, this isn't a campaign to add taxes. The tax is there. The question is who collects that tax. Amazon (and the State) knows the purchaser will probably not pay if the vendor doesn't collect. Residents will pay with reduced services or, at some point, a higher sales tax rate to replace the lost revenue.

August 12, 2011 at 6:12 p.m.
Selah said...

Stand by your word!!! A deal is a deal...right on fuzzy

August 12, 2011 at 9:40 p.m.
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August 12, 2011 at 11:18 p.m.
Eric said...

LibDem is right, and I don't think the other posters understand his point. In Tennessee (and probably most other states, but I can't say for sure) the responsbility for paying sales tax falls on the PURCHASER. This responsibility is not limited to just businesses. True, businesses have to file a sales and use tax return where they pay taxes on untaxed out-of-state purchaes. This return is required even if the amount is $0. But if private citizens buy untaxed items from out-of-state, the citizen needs to remit the appropriate amount of tax to the state. Failure to do so is tax evasion.

Of course, the TN Dept of Revenue is not going to be checking everyone's credit cards for these purchases. That is why the state is being so picky about Amazon paying the sales taxes. Most citizens won't. But that doesn't mean it is legal.

August 12, 2011 at 11:32 p.m.
jesse said...

actualy the whole hangup is not amazon PAYING the sales tax but for amazon to collect the sales tax from tenn.people who buy from them!!

August 15, 2011 at 1:30 p.m.
suealex said...

A deal is a deal. Whatever was negotiated to bring Amazon here to Tennessee is what should be honored. We need corporations to do business in our state and we need to encourage business to come here. Trying to change the terms after the contract has been signed is illegal and immoral.

August 21, 2011 at 1:05 p.m.
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