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

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

October 6th, 2011 by Andy Sher in Local Regional News

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/Times Free Press.

NASHVILLE - Gov. Bill Haslam today announced a preliminary agreement with Amazon.com 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.

POLL: 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.

Connect with the Times Free Press on Facebook