NASHVILLE – A top Amazon official is defending a sales tax exemption state officials plan to maintain after the Internet retail giant opens $139.1 million distribution facilities in Hamilton and Bradley counties.
During a meeting with Southeast Tennessee legislators in Nashville, Amazon policy director Fred Kiga was asked about criticism of the break from other retailers. Unlike conventional retailers, Amazon does not have to collect sales taxes on purchases made by Tennessee customers online.
“We are now getting numerous e-mails, phone calls and letters from local retailers saying what’s going to happen to the sales tax collection? And why would I have to collect tax and you do not?” asked Sen. Andy Berke, D-Chattanooga.
Kiga said the distribution centers are set up separately from Amazon. They serve as “drop shippers,” providing services to out-of-state retailers that do not have a physical presence – in legal jargon, a “nexus” – in Tennessee, he said.
“The out-of-state retailer still does not have nexus in the state of Tennessee and as a result it is not required to collect sales tax online for Tennessee residents,” Kiga said.