Tennessee lawmaker says Amazon should treat state same as California

Tennessee lawmaker says Amazon should treat state same as California

September 9th, 2011 by Andy Sher in Business Around the Region

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...

Randy McNally

Randy McNally

NASHVILLE-A major critic of Tennessee's deal with Amazon.com says the state deserves treatment similar to a preliminary agreement with California in which the Internet retailer agreed to begin collecting state sales tax after a one-year reprieve.

"I think Amazon would want to try to treat states the same as far as collection of the sales tax," Tennessee Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, said Thursday.

California lawmakers struck a tentative deal Thursday with the Internet giant, which has been battling in a number of states over collecting sales taxes on items sold to in-state customers.

If Amazon is unable to get Congress to change federal tax policy by next June, the company would have to start collecting California taxes in September 2012, The New York Times reported. The deal could fall apart, the newspaper said.

Tennessee Gov. Bill Haslam has been seeking to persuade Amazon to begin collecting sales taxes after his predecessor, Phil Bredesen, struck a deal saying it would not have to in exchange for locating two multimillion dollar distribution warehouses in Chattanooga and nearby Bradley County.

Haslam initially said he backed the deal after Bredesen ran it by him after Haslam was elected but before he took office. The governor has repeatedly said he is standing by the initial deal and is seeking voluntary compliance from Amazon.

"We don't have anything to say about the developments in California with regard to Amazon," Haslam spokesman David Smith said Thursday.

House Majority Leader Gerald McCormick, R-Chattanooga, a staunch Amazon supporter, said if Amazon officials decide "they want to do the same thing [as in California] here, they'd be welcome to. But with that in mind, I think the state is obligated to keep its promises on the original deal if that's what Amazon chooses to have us stick to."

In Tennessee, McNally and a group of other Republican lawmakers have objected to the state's terms with Amazon, saying it would cost the state money, set a bad precedent and create unfair competition for traditional brick-and-mortar retailers.

A fierce lobbying effort by retailers including Wal-Mart, Best Buy and Memphis-based AutoZone was mounted in the Tennessee General Assembly this year to force Amazon to collect Tennessee sales taxes.

Amazon officials said the distribution centers, which would not handle sales nor accept returns on items, do not meet sufficient physical-presence standards for sales tax collections required under a 1992 U.S. Supreme Court ruling. The coalition of retailers disagreed.

The company has argued the rules over sales tax collections require a national solution. Amazon also warned that if Tennessee tried to force the company to collect sales taxes, it might abandon the two warehouses the company is spending about $129 million to construct in Southeast Tennessee.

The company also would shelve plans to hire about 1,200 full-time workers and more than 2,000 part-timers at the Enterprise South industrial park site and the Bradley County facility. Since then, Amazon has announced it has leased space for yet a third facility just outside Nashville.

The legislation was delayed until next year. At virtually the same time, Amazon, which was building a center in South Carolina, struck a deal to begin collecting sales taxes there after a four-year moratorium.

Haslam, who has opposed the Tennessee legislation, repeatedly has claimed that has not put pressure on his move to renegotiate the Tennessee deal. Now, the governor may have to contend with yet another state in which Amazon has agreed eventually to begin collecting sales taxes.

Amazon was supposed to start collecting the California sales tax under a new California law that took effect July 1. The company sought to fight it through a public referendum.

If a provisional agreement can be approved by the end of the state's legislative session today, the referendum will be dropped, The New York Times reported.

The Associated Press and The New York Times contributed to this report