published Thursday, October 6th, 2011

Amazon agrees to collect sales tax, more expansion coming in Tennessee

House Majority Leader Gerald McCormick, R-Chattanooga, left, speaks Thursday at the Chattanooga Area Chamber of Commerce as Hamilton County Mayor Jim Coppinger, center, and Chattanooga Mayor Ron Littlefield listen.
House Majority Leader Gerald McCormick, R-Chattanooga, left, speaks Thursday at the Chattanooga Area Chamber of Commerce as Hamilton County Mayor Jim Coppinger, center, and Chattanooga Mayor Ron Littlefield listen.
Photo by Angela Lewis.
  • Amazon will collect taxes, hire more Tennesseans
    House Majority Leader Gerald McCormick, R-Chattanooga, announced on Thursday that Tennessee and Amazon have reached an agreement to begin collecting sales tax Jan. 1, 2014. He also announced that the online retailer will add 2,000 more full-time positions across the state.
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NASHVILLE — Gov. Bill Haslam today announced a preliminary agreement with in which the Internet retailing giant agrees to collect sales taxes on purchases made by Tennessee consumers if Congress doesn’t address the issue of online sales taxes.

Amazon, which is set to open two warehouses in Southeast Tennessee this fall, would begin collecting sales taxes beginning Jan. 1, 2014 absent federal action, Haslam said.

“We are proud that this worldwide brand has chosen to make a significant investment in Tennesse and is committed to expanding its presence here,” he said. “This agreement balances meeting the needs of the company and the needs of the state by providing certainty to Amazon and brick-and-mortar retailers in Tennessee.”

The online retailer also will add 2,000 more full-time positions, according to the governor. Along with already-announced warehouses in Hamilton and Bradley counties, the new deal calls for the online retailing giant to build two more centers and hire 1,500 to 1,700 full-time workers to staff them.

Amazon has made job offers to 1,500 full-time workers for the Hamilton and Bradley centers and begun training for some of the new hires. Amazon also recently announced plans to open another warehouse in Lebanon, Tenn., with 300 to 500 workers.

Amazon Vice President of Global Public Policy Paul Misener called the agreement “a big deal for us.”

But he said the sales tax collection issue “must be resolved in Congress. It’s the only way for the state of Tennessee to be able to obtain all the sales tax that can be collected.”

“We’re committed to going to Washington with the state’s leaders here in Nashvillle and in Washington, D.C. to obtain that sales tax legislation as soon as possible,” he said.

Misener pointed out that, despite Amazon agreeing to collect sales taxes — which critics charged gave it a price advantage between 7 percent to 9.75 percent in Tennessee — “analysts have noted we will still be able to offer our customer low prices regardless of whether the sales tax is collected.”

Amazon has fought sales tax collections across the country, congressional action is needed. But in recent months, Amazon has struck agreements with California and South Carolina to begin collecting sales taxes within one year and 4 1/2 years, respectively. Haslam has been negotiating with Amazon to come to a similar arrangement.

Haslam said Tennessee's deal should is not comparable to California's.

"They have an existing physical presence that's been there for years. It [comparison] is really not an apples and apples situation," he said.

Tennessee’s original deal was struck last year by outgoing Gov. Phil Bredesen. Since then, however, influential legislative Republicans, small mom-and-pop stores and major retailers, including Wal-Mart and Best Buy, have complained Bredesen’s agreement to let Amazon avoid collecting sales taxes put them at a government-imposed competitive disadvantage.

During this year’s legislative sessions, two power Republican lawmakers pushed legislation requiring Amazon to collect sales taxes once it opened the Hamilton and Bradley facilities and established actual physical presence. Such physical presence is the standard the U.S. Supreme Court has established limiting states’ abilities to compel out-of-state retailers to collect sales taxes.

Do you agree with Amazon's decision to collect sales taxes on purchases made by Tennessee consumers?

The legislation was delayed, but it spurred Haslam to begin discussions with Amazon setting a time limit on the company’s not having to charge sales taxes.

Earlier this week, Tennessee Attorney General Bob Cooper issued a legal opinion that raised the possibility that Amazon would have to collect sales taxes under current state law.

Read more in tomorrow’s Times Free Press.

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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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walther said...

There are plenty of companies who locate in an area because of tax breaks and other incentives. When the tax breaks and incentives expire, they tend to close their plants and relocate. Expect Amazon to do this in 2 years, unless there is a federal law passed that requires all companies to collect for all states.

October 6, 2011 at 12:10 p.m.
Friend said...

Amazon should observe the same laws as every other company in Tennessee!

October 6, 2011 at 1:27 p.m.
mrredskin said...

emjoy the next two years while you can, i guess.

October 6, 2011 at 2:11 p.m.
Warren said...

Amazon should observe the same laws as every other company in Tennessee!

Even if they have no store fronts? Having the distribution centers here is going to make the shopping experience no different for me than if I was living in any other state yet I will have to pay sales tax unlike 47 other states. 2014 is when I stop using amazon and find some other place to spend my money online. The same thing happened years back when Newegg started charging taxes. The additional price increase of 7 to 9.75% is just too much to justify it. This needs to be solved at the federal level so it's for the whole US or nothing at all.

October 6, 2011 at 2:13 p.m.
adolphochs said...

I'll order from another on-line vendor without TN nexus. Next question?

October 6, 2011 at 2:46 p.m.
nowfedup said...

TN has highest sale tax rate in nation, then they pull this one where it seems, 'the government picks winners and losers" which the tea klan and R's seems to howl about. I did NOT see anything in there about what happens to all the tax breaks and freebies they got if, as they are proven to do, in 2014 they simply shut the doors and move. Their buildings sold to someone else that might pay sales taxes? This is just another rip off where to make up the tax shortfall from all the taxes welfare they get, someone else will make it up, How much longer do our elected thugs think they can give our corp welfare by screwing everyone else? This one reeks of corruptions and payoffs, very glad am not a real TN business that now is at 10% disadvantage thanks to a corrupted Nashville and the money cronies there. So how much IN TOTAL, includes tax welfare they got and estimated taxes they will not pay, did A get from TN? NONE seem to know. By the way a stinging article in HP about what they did to workers in PA and for all of you applying for jobs at A, you are in for big shock on how you are going to be monitored and managed. This "won't be your daddy'w warehouse job' to slightly paraphrase and ole Olds' ad. Anyone else read PA story?

October 6, 2011 at 3:20 p.m.

There it is again, the smug face of King Ron Littlemind. Ron, I don't RECALL your effort to land Amazon being all that much. It was mostly "yes, Phil" and "okay, Phil". Right?

October 6, 2011 at 4:43 p.m.
SavartiTN said...

Walmart and Best Buy led the fight to make Amazon collect sales tax. Maybe the best action would be to boycott those two retailers.

I think that this is appalling. Maybe Tennessee could force the brick and mortar retailers to provide free shipping for internet sales.

The sales tax issue here pales in comparison to the tax incentives and tax breaks given to Volkswagon.

October 6, 2011 at 6:40 p.m.
328Kwebsite said...

I am glad to see that Amazon has chosen to respect our state laws. However, we expect to see equity creation. Amazon's announced practices of not hiring the unemployed do not meet our state's expectations for providing multimillion dollar tax breaks. Promises to obey the law in the future do not make up for their choice to behave unethically today. While this is a step in the correct direction, it's far from the leadership we expect from a multi-billion dollar corporation.

October 6, 2011 at 8:53 p.m.
nowfedup said...

All ou lil darling about to rush out and sign up for those spectacular jobs at Amazon, you might read these first. Note be careful for what you wish for, just might happen. these folks play be the numbers, and nothing else.,0,7937001,full.story

October 6, 2011 at 10:44 p.m.

Greedy politicians! TN already has the highest Sales Tax in the U.S. I buy from Amazon because they usually have the best price (Not Always), good web interface and easy to use. Once they start charging Sales Tax, they will become the most expensive (for consumers in TN), and this will simply make me find another online source that does Not charge Sales Tax. In the end, my allegiance to Amazon is based in cost, when it goes up, they go away. Over the years, I have already stopped buying from several online sites when they jump on the band wagon of charging sales tax. Amazon seemes to be the next one in line to be dropped. Maybe, they will wise-up, and either discount the cost of goods to offset the Tax (for consumers in TN), but I doubt that. Isn't there an old saying, "Pigs get Fat, but Hogs get Slaudered". I wouldn't want to be in Amazon's place when this happens, TN sales will drop like a rock!

May 7, 2012 at 8:37 a.m.
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