published Tuesday, October 4th, 2011

Tennessee retailers say Amazon.com must collect state sales taxes

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.
Follow us on Twitter for the latest breaking news

NASHVILLE _ Brick-and-mortar retailers contend a new Tennessee attorney general opinion establishes that Amazon must begin collecting state sales taxes once it opens two distribution centers.

The only way to prevent that is for state lawmakers to enact legislation specifically exempting the Internet retailer from the requirement, they say.

“The AG opinion effectively reverses the situation in the legislature,” said former state Deputy Attorney General Bill Hubbard, who represents major national retailers, in a statement. “The burden is on Amazon to have to pass a bill in order to have a sales tax exemption.”

State Attorney General Bob Cooper issued the opinion today as Amazon nears completion of two giant warehouses in Hamilton and Bradley counties.

In the opinion, Cooper said current law requires retailers with a distributing house or a warehouse to collect sales taxes.

But Cooper qualified that substantially, saying that if the facility is owned by a retailer’s subsidiary, “nexus” or physical presence “is established only if the subsidiary’s in-state activities are significantly associated with the retailer’s ability to establish and maintain a market in Tennessee for its sales.”

In a meeting with local lawmakers earlier this year, Frederick C. Kiga, Amazon’s director of tax policy at Amazon, said the distribution centers are set up separately from Amazon. They serve as “drop shippers,” providing services to out-of-state retailers, he said.

 “The distribution centers are separate entities. They do not establish or maintain a market for an Amazon retailer there,” Kiga said. “People cannot walk up to a facility and, you know, pick up their goods.”

In his opinion, Cooper said the state revenue commissioner cannot waive sales tax-collection requirements for a company where the “Retailers Sales Tax unambiguously establishes obligation to pay such taxes.”

That has been a major argument by critics, who say the state is trying to do just that.

But the opinion adds substantial vagueness to the matter, noting the revenue commissioner “possesses substantial discretion in determining the best measures to take to enforce Tennessee’s tax laws.”

“The exercise of such discretion is particularly appropriate where the enforcement of a tax may be debatable,” the opinion says.

Gov. Bill Haslam, who has said he accepts the agreement then-Gov. Phil Bredesen struck with Amazon, later told reporters earlier today, “I literally just heard that we got it so I haven’t seen the AG’s opinion so I don’t really have a whole lot to say new on that.

“We continue to have discussions with Amazon,” Haslam said of ongoing talks aimed at persuading Amazon to collect taxes despite the deal. “Hopefully, we can come up

with something that works for everybody sooner rather than later.”

He conceded that it could be “one of the outcomes [is] that we’d have to have some

legislation passed to set up whatever the new arrangement is.”

The opinion was issued in response to questions posed by Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, and House Finance Committee Chairman Charles Sargent, R-Franklin. Both men are critical of the deal in which tBredesen agreed not to compel Amazon to collect state sales taxes if the Internet retailing giant built two giant distribution warehouses in Hamilton and Bradley counties.

Those facilities are nearing completion.

Connect with the Times Free Press on Facebook

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, ...

21
Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
esaletnik said...

Tennessee retailers can pass laws now?

October 4, 2011 at 4:28 p.m.
HermanMelville said...

A deal is a deal. I know politicians are used to breaking promises, but the voters don't normally walk away. Amazon will and did this year in Irving, Texas. Politicians say they want to create jobs and cut taxes. Here is a case of killing jobs over wanting more tax revenue.

October 4, 2011 at 4:39 p.m.
freind said...

Leave Amazon Alone!!!!!! They are bringing jobs to our community!!! Much needed Jobs!

October 4, 2011 at 5:14 p.m.
SavartiTN said...

Hey, "brick and mortar" retailers...I will continue to shop Amazon even if they have to collect sales tax...it's about the convenience and free shipping. Duh!

October 4, 2011 at 5:53 p.m.
MasterChefLen said...

Which retail PAC group is giving money to Randy McNally and Charles Sargent? That is the only reason they are critical of this. If Amazon was building centers in their districts, they would be surprisingly silent.

October 4, 2011 at 6:38 p.m.
terrya88 said...

Like HermanMelville said, a deal is a deal. Break it and I think it will be time to clean house for the next election.

October 4, 2011 at 7:08 p.m.
328Kwebsite said...

The state law says that everyone is responsible for paying sales tax on Internet transactions in Tennessee. Look it up. Whether they collect it or not, you are supposed to be paying.

The state department of revenue would collect on any of us who opened a business. There is nothing "job killing" about it.

Further, look carefully at the lobbying ploy the governor's office just put up. He's not actually interested in doing much else besides now getting a law -- getting a law -- that specifically exempts Amazon. This is a dramatic increase in what's been proposed so far.

It is a stronger failure to collect taxes on the Governor's part.

The law says that the taxes need to be collected. Period. No exceptions.

Further, look at how Amazon has failed to live up to its half of the agreement. Their hiring practices have been discriminatory. The contracts they are making people sign are abhorrent. They are creating a contractual situation with every prospective employee that they will be treated without basic regard for their rights as voting adults in this area.

Go home early for any reason? You're fired.

Need to go to the bathroom at the wrong time? You're fired.

Called in sick today? You're fired.

Fell behind production schedule? You're fired.

Tell anybody about this contract that I'm complaining about to you right now? You're fired.

This is not gainful employment. It is below the standard of basic commerce. It is far below the basics of working condition among free people in our area.

Returned from war and are now unemployed? No unemployed people will be hired at Amazon. Their advertised practices, of their own initiative, are not only Draconian, but discriminatory and prejudicial.

Let's give Amazon a little class in Owner's Equity. Stealing assets from a neighboring business in the community by taking an worker employed somewhere else is not "job creation." It's equity theft.

The tax break Amazon is getting is for creating jobs, not stealing workers and insulting our citizens.

In response to this, the Governor lames and limps his way through taking no position at all and them slyly proposes that Amazon's lobbyists come up with a way to have their deal permanently codified into state law.

Excuse me while I puke.

October 4, 2011 at 7:33 p.m.
328Kwebsite said...

How far did IQs drop while I was last in Iraq? Can you people do anything besides __ each other for a dollar? Build a business, fair and square. We have been able to get that done for several hundred years in this area. We don't need multimillion dollar payoffs or bank accounts stuffed to the gills with paper fraud.

Get it together. Amazon needs to pay their taxes.

Yes, Amazon, we are aware that your stock will plunge into the same abyss as every other warehouse business as soon as you collect taxes.

Why does Amazon not want to collect taxes? Because as soon as they do, what they do will be publicly observable and reportable. They have been riding a bubble for many years now, and they fear a crash. It's that simple.

Their tax evasion protects their bottom line. Amazon is trading at 212.50. They're a warehouse business. Comparable businesses, like eBay trade at 29.35. UPS? 64.06. FedEx? 67.86 Wal-Mart? 52.88.

Amazon's stocks will plunge to about 25% of their current worth if they have to tell anyone the truth about what they are doing over there.

Look at that stock price for Amazon today. $212 a share. Look at the website. What do those people do that's worth $212 a share?

They ship books. They sell webpages. When they are selling an ebook for a Kindle reader, the ebook is a web page, too.

What is over there at Amazon that justifies $212 a share?

Well, as soon as they start reporting taxes, the sharks will be all over them. Those financial people eat, sleep and breathe all kinds of tax and money reports. They will have concrete proof that the stock price is insanely overvalued. Tax records are public documents in some kind of way. Investors and money people will figure it out. They have probably already suspected so for a long time.

The tax breaks aren't about making the facilities possible or employing our people. It's about CYA at Amazon.

So, our state offers them the secrecy they need to avoid facing their real value. If they had to file tax reports, everyone who knows about that sort of stuff would see what that value truely is.

These fatkats have been lying about assets and liabilities for decades; but the Department of Revenue will know how to bill them for their observable value when it's tax time.

That stock's price will then be based on observable value.

The stock's value would probably plunge to below 10% of its current worth, and then rebound to 25% of its current worth. Maybe over time it'll crawl up to 40% of its current worth. Yet, not before Amazon loses so much money that they have trouble keeping the lights on.

They come to us, we offer them a chance. What do they do? Rip us off.

Just collect the taxes. If Amazon leaves, that's okay. We don't need our people subjected to another crash because of some paper tiger fraud.

The governors should have said as much and stood up for our people. In this financial crisis, they need protection.

October 4, 2011 at 7:33 p.m.
onetinsoldier said...

Great post 328K, good info. Amazon needs a good UNION, they came here to avoid paying a fair wage.

October 4, 2011 at 7:59 p.m.
SavartiTN said...

That's right...tax Amazon. Oh...and be sure to raise income taxes on the wealthy, too. It's all fair, right?

October 4, 2011 at 9:11 p.m.
tomatoketchup said...

Brick and mortars can suck it. As history has shown, Amazon will simply sever all connections with the state and peace out as it has done in California, taking all the jobs with them. This is one of the very few companies (Apple also comes to mind) that solidly delivers on customer service, as opposed to the incompetent employees at the local yellow and blue electronics chain. These other companies have had over 10 years to refine their business models and have failed to do anything more than sit with their thumbs up their backsides. Let the brick and mortars fall. Good riddance.

October 4, 2011 at 9:48 p.m.
HermanMelville said...

To say Amazon does not hire the unemployed is entirely false. I know for a fact they hire the unemployed and also recruit military veterans for management positions. To say Amazons stock is over priced because they are just a website is like saying Microsoft is over valued because it is only a bunch of binary code.

October 4, 2011 at 10:12 p.m.
MountainJoe said...

If TN reneges on the sales tax agreement, I hope Amazon leaves the warehouses empty and takes the jobs somewhere else. It would serve our politicians right. A deal is a deal.

October 4, 2011 at 10:57 p.m.
Smithbrother said...

Amazon does not own any store, anywhere . Amazon does not sell anything. Amazon is a middle agent for others who sell. Amazon has neither stores no businesses only shipping warehouses.

As for low wages paid in Tennessee. The majority of the citizens in Tennessee voted for the right to work for less, no closed shops. All "right to work" states pay lower wages that closed shop states.

October 4, 2011 at 11:09 p.m.
tnbound said...

More Lies from 328K: "Go home early for any reason? You're fired. Need to go to the bathroom at the wrong time? You're fired. Called in sick today? You're fired. Fell behind production schedule? You're fired. Tell anybody about this contract that I'm complaining about to you right now? You're fired. Returned from war and are now unemployed? No unemployed people will be hired at Amazon."

All of these claims are absolutely false. Not sure where you get your info, 328K but you are misled and are misleading fellow veterans like onetinsoldier. Amazon has hired over 1500 people for the Hamilton County warehouse alone, many of them veterans, unemployed or both.

Did anyone else notice this in the article: "State Attorney General Bob Cooper issued the opinion today as Amazon nears completion of two giant warehouses in Hamilton and Bradley counties. In the opinion, Cooper said current law requires retailers with a distributing house or a warehouse to collect sales taxes. But Cooper qualified that substantially, saying that if the facility is owned by a retailer’s subsidiary, “nexus” or physical presence “is established only if the subsidiary’s in-state activities are significantly associated with the retailer’s ability to establish and maintain a market in Tennessee for its sales.”"

As Amazon claims that these warehouses are part of a subsidiary of Amazon and their presence and activities in TN provide no significant ability to "establish or maintain a market in TN for its sales" - then nexus is not established and Amazon is not required to collect sales tax. And 328K, it is not Amazon that is avoiding/evading taxes, it is the customer who is still required to pay the tax, even if the retailer doesn't collect it for them.

October 5, 2011 at 11:13 p.m.
please login to post a comment

Other National Articles

videos »         

photos »         

e-edition »

advertisement
advertisement
400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.