Controversy has waned but not died over Amazon.com’s exemption from collecting sales taxes on goods shipped to Tennesseans due to its new physical presence in the state. A new ruling by the state attorney general’s office appears to support a proposed law to require sales tax collections in this circumstance and bolsters critics of the exemption.
Atty. Gen. Robert E. Cooper’s opinion suggests that the new plants create the physical “nexus” that is required under a U.S. Supreme Court ruling to invoke a retailer’s liability for collecting a host state’s sales taxes.
Amazon is not likely to concede the point without a legal battle. It may also again threaten to leave the state if it is required to collect sales taxes on sales to Tennesseans. It’s position has been that its new facilities here will merely be “distribution centers” that mainly drop-ship goods to retailers elsewhere.
Regardless, Cooper’s opinion should provide new focus on the legal issue. It should encourage a fair hearing in next year’s legislative session of the proposed law to require facilities such as Amazon’s to collect sales on sales inside the state. And it should prompt Gov. Haslam to renew discussions with Amazon on the sales tax question before the next legislative session begins.
We hardly expect the latter. Haslam has seemed reluctant to risk playing a hand that might end with Amazon canceling its new distribution centers in Hamilton and Bradley counties.
That risk must be tolerated. Brick-and-mortar retailers in Tennessee duly collect sales taxes. Allowing Amazon to skip collections gives it an unfair advantage in sales of similar items. A recent Wall Street Journal story compared the price differential on same-brand and model televisions, cameras and other goods sold by Amazon in competition with other big-box, brick-and-mortar retailers. Amazon’s advantage through sales-tax avoidance is clearly significant, and absolutely unfair.