State Sen. Bo Watson is rightly advocating greater transparency in the state’s Revenue Department’s rulings on the application of Tennessee’s tax laws and statutes for businesses of all sizes. To achieve transparency, he has introduced a bill that would require the Haslem administration to resume publishing the Revenue Department’s advisory “letter rulings” and “revenue rulings” on tax policies and compliance issues. His initiative merits support. Without such transparency, citizens and businesses simply cannot know if the state’s tax codes are being uniformly and impartially applied.
One current, high-profile case stands out as an example of the public’s right to know whether and how its tax laws are being applied: Amazon.com. The company has said it will not collect state sales taxes from the two new distribution facilities it is erecting here, and the Haslem administration has canceled a hearing on the matter and refused to say what its policy on that issue will be. If the state won’t publish its rulings or explicitly state its tax policies, Tennesseans may never know if Amazon ultimately will be required to collect sales taxes on its sales out of the new facilities, which are now under construction. This murky stand-off should be transparently resolved.
Officials of Amazon, which is receiving a host of tax abatement and other taxpayer-supported incentives, have said they will not collect Tennessee’s sales taxes from their new facilities because their new “distribution centers” do not actually make sales. That is a semantic evasion.
Critics, particularly owners of the brick-and-mortar retail stores that pay property taxes and that collect Tennessee sales taxes on sales to all customers here from any state, correctly maintain that sales made by online retailers operating in Tennessee should also collect state sales taxes as a matter of equity and fair competition. Their grievance is legitimate.
As it now stands, however, the chances that Tennesseans will be told anything about the application of state tax policy with regard to Amazon – and other businesses with which the administration cuts tax deals – are slim to null. The department quit posting its Revenue department’s rulings and letters in 2008 under former Revenue Commissioner Reagan Farr, and the Haslem administration is now trying to devise a “compromise” to keep Watson’s bill from reaching the Senate floor.