U.S. Sen. Bob Corker says Internet sales tax collections 'will be resolved'

U.S. Sen. Bob Corker says Internet sales tax collections 'will be resolved'

August 17th, 2011 by Andy Sher in News

An employee works at an Amazon distribution center in Fernley, Nev. Contributed Photo

Photo by

POLL: Should the Feds settle the internet sales tax issue?

Bob Corker

CARTHAGE, Tenn. - U.S. Sen. Bob Corker said Tuesday it may take years before Congress enacts legislation letting states collect sales taxes to items sold over the Internet.

Corker, R-Tenn., said he realizes the sales tax issue "is a problem" not only for state and local governments but for traditional retailers.

"I have a feeling that, over the next three or four years, it's something that will be resolved, I really do," Corker told reporters following an address to the Smith County Chamber of Commerce.

Corker said he can't say if he will support legislation sponsored by Sen. Dick Durbin, D-Ill., that would let states compel Internet retailers to collect sales taxes when they do not have a physical presence in a state.

"I don't know," Corker said. "I don't know what the details of it are. I know that it [legislation] is actually changing right now."

Tennessee Gov. Bill Haslam is grappling with a sales-tax collection controversy involving the state's recruitment of Amazon to build distribution centers in Hamilton and Bradley counties.

The governor has said he is "more than willing" to take a national role in pushing Congress to act, but it appears Haslam has got his work cut out for him with just his home-state delegation.

Corker said that, while he has talked with Haslam some about the issue, "he has not mentioned that he may be taking a leadership [role], but we both have a lot going on."

He said he was having dinner later Tuesday evening with Haslam and the topic likely would come up.

Amazon is spending $139 million to build two distribution centers in Hamilton and Bradley counties that will employ about 1,200 full-time workers and more than 2,000 part-time workers. Last month, the company announced plans to open a third center in Lebanon, Tenn., which the company says would employ "hundreds."

The deal cut by previous Gov. Phil Bredesen to get Amazon into Tennessee involved a commitment that Amazon would not have to collect sales taxes. Under U.S. Supreme Court rulings, retailers with no physical presence in a state cannot be legally compelled to collect sales taxes.

But Haslam is now pressing Amazon to voluntarily let that commitment expire after several years.

According to the University of Tennessee's Center for Business and Economic Research, Tennessee state and local governments will lose out on an estimated $410 million in tax revenue because of overall Internet sales.

Earlier this week, a top official at Chattanooga-based CBL and Associates, one of the nation's top mall operators and the developer of Hamilton Place, said that while CBL welcomed Amazon to Chattanooga, traditional retailers were disadvantaged because they must collect state sales tax of 7 percent and local option sales taxes of up to 2.75 percent in Tennessee.

A former Chattanooga mayor and developer, Corker said he has built malls and recognizes the problems traditional retailers face when it comes to competing against Internet retailers.

"The brick-and-mortar stores have turned out to be places where people look at the product and try it on and see if it works for them," Corker said. "And then they go to the Internet and actually buy the product without sales taxes. Obviously, that's unfair."

Efforts to obtain positions on the issue from several other Tennessee lawmakers were unsuccessful.

Republican U.S. Sen. Lamar Alexander's office did not respond Tuesday to a request for comment about the Durbin bill. But back in 2003, Alexander, a former Tennessee governor, was quoted by the Chattanooga Times Free Press as backing a similar effort that ended up going nowhere.

U.S. Rep. Chuck Fleisch-mann's spokesman Jordan Powell said via email that the Chattanooga Republican "will be discussing the details of this important issue with Governor Haslam and [state House] Majority Leader [Gerald] McCormick next week."

McCormick, R-Chattanooga, has said federal action is necessary, but he also has said that pending such action, he believes Amazon will cut a deal with the state to begin collecting sales taxes at some point. If Amazon does not agree, McCormick has said he will defend it against state efforts to force it to collect the taxes.