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Gov. Haslam

By Richard Locker / Commercial Appeal

NASHVILLE - Gov. Bill Haslam said Wednesday that untaxed Internet sales are eroding Tennessee's tax base and said he's willing to take a leadership role among governors in urging Congress to pass a national approach to collecting sales taxes on goods sold over the Internet.

He said Tennessee already is losing between $300 million and $500 million a year on untaxed Internet sales - a growing number since the states and Congress have been unable for more than a decade to agree on a "streamlined sales tax" process enabling online retailers to collect taxes easily for the nation's thousands of state and local taxing jurisdictions.

"It's not going to begin eroding the state's tax base; it already is. Something has to happen nationally. The whole streamlined sales tax is a big deal, and I'm more than willing to play a leadership role," Haslam said. "It has to be addressed on a national level, or we're going to keep playing these kinds of move-around games."

His remarks were part of a discussion with reporters about an advisory opinion issued by state Attorney General Robert Cooper last week indicating the state Legislature could enact a law requiring an online retailer with a physical presence in Tennessee to collect sales tax on items it sells to Tennessee residents and businesses.

Cooper made it clear that the opinion addressed online retailers generally and was not directed specifically at, whose dealings with state revenue officials were the focus of a legislative inquiry in May.

The chairmen of the House and Senate finance committees filed but did not pursue legislation to override a secret agreement between Amazon and the state revenue commissioner. That agreement keeps the retailer from having to collect sales tax on Tennessee sales after it locates two distribution centers in Chattanooga and Bradley County.

Haslam said the state still is in discussions with Amazon about locating two more distribution centers in Tennessee, but there is nothing new to report.

The governor also said that talk by legislators about a possible two-year moratorium on Amazon sales tax collections, then forcing the Seattle-based Internet giant to collect Tennessee sales tax, could cause Amazon to reconsider whether to build its centers - and locate jobs - in the state.

At stake are not only the tax bases of state and local governments but whether Tennesseans who shop online have to pay nearly 10 percent in state and local sales taxes on their purchases.

A group of other online retailers who do collect sales tax because they have physical presence in Tennessee opposed a tax break for Amazon while the Legislature was in session and are considering a lawsuit on the grounds that the agreement with Amazon is unfair to other retailers.

Contact Nashville Bureau chief Richard Locker at 615-255-4923.