published Friday, February 18th, 2011

Tennessee freeze on new rules may affect Amazon

  • photo warehouse in Goodyear, Ariz. (AP Photo/Ross D. Franklin)

NASHVILLE — A proposed Tennessee Revenue Department rule change that would apparently impact online retailer Amazon is in limbo — a victim of Gov. Bill Haslam’s 45-day freeze on pending rules and regulations.

Revenue officials, citing rules that shroud most of their actions behind a wall of secrecy, said they cannot say the proposed rule would affect Amazon — let alone whether it impacts the company’s plans to invest $137 million in two 1 million-foot distribution centers in Hamilton and Bradley County.

The company intends to hire 1,400 full-time employees to run the centers.

Amazon currently refuses to collect sales taxes for books, music and devices it sells in many states including Tennessee, arguing it has no physical presence that would require it to do so. The rule appears to continue that exemption despite the presence of the distribution centers.

The proposed regulatory change exempts “any dealer operating as a distribution center” from collecting Tennessee state sales taxes if 50 percent of their gross receipts come from shipments on behalf of another vendor “to destinations outside this state.”

The proposal had been scheduled for a Feb. 25 public hearing before the Revenue Department, confirmed Revenue Department spokeswoman Sara Jo Houghland, who said departmental rules prohibited her from identifying what companies might be affected by the change.

Shortly after taking office, Haslam announced a 45-day freeze on new regulations as part of his “top to bottom” review of state government operations.

But the move appears to have caught up the Amazon deal, which had been negotiated in part by the governor’s deputy, former Hamilton County Mayor Claude Ramsey.

Haslam said last week during a Chattanooga visit that Amazon shouldn’t have to collect sales taxes because of the Hamilton County distribution center.

“I don’t think because Amazon decides to build a distribution center here, that should change their tax status,” he said.

A number of retailers in the state are upset, saying it is unfair they have to charge the state’s seven percent state sales tax and up to 2.75 percent in local sales taxes when Amazon, a director competitor, does not.

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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TNCitizen said...

It's been estimated that Amazon's sales tax collections would be $64 million a year. Why should the state give them that much money and allow them a huge competitive advantage over retailers who have paid taxes in TN for years. How would you like for the state to take your hard-earned tax dollars and give them to your competition? It's the worst form of wealth redistribution.

February 19, 2011 at 1:39 a.m.
carlB said...

Username: TNCitizen | On: February 19, 2011 at 1:39 a.m.

Reply to TNCitizen: I am assuming that you have read the controversy between the state of Texas abd Amazon? I seems as if this tax problem is one if the reasons Amazon is closing two centers in Texas because of the sales taxes.

There is not being a complete disclosure report to our tax payers on entire cost involved in any of the manufacturing "implants" locating in our area.

February 19, 2011 at 1:35 p.m.
TNCitizen said...

Yes, Amazon has shown itself to be a bully. NY passed a law requiring Amazon to collect NY sales tax based on Amazon's use of "affiliates" in NY to solicit sales. Amazon filed suit and has lost twice. Rhode Island and NC passed similar laws and Amazon retaliated by terminating its affiliate programs. Colorado passed a different law requiring all out-of-state vendors who sell more than $10K into the state to either collect sales tax or report to their customers and to the state the amount of purchases annually. Amazon terminated its CO affiliates, too.

They abandoned their distribution centers in TX when the state attempted to collect sales tax. And now they're trying to blackmail TN by demanding an exemption from sales tax as a condition of locating here.

February 19, 2011 at 11:13 p.m.
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