Haslam wants new tax deal with Amazon

Haslam wants new tax deal with Amazon

August 12th, 2011 by Andy Sher in News

Katherine Braun sorts packages toward the right shipping area at an Amazon.com fulfillment center in Goodyear, Ariz., in this Associated Press file photo. Some Tennessee lawmakers object to Amazon not paying sales taxes on products that will be shipped from its Hamilton and Bradley fulfillment centers.

Gov. Haslam

Gov. Haslam

NASHVILLE - Gov. Bill Haslam's efforts to negotiate a "new relationship" with Amazon on state sales-tax collections is drawing a mixed response among Southeast Tennessee lawmakers but producing cheers from one of the Internet retailing giant's biggest critics.

"No one from the governor's office has spoken to me concerning this issue at all," said Rep. Eric Watson, R-Cleveland, who represents a portion of Bradley County where one of two Amazon distribution centers is being built. "I don't understand really what the governor says when he says that."

Haslam was quoted Thursday by The Tennessean newspaper as saying he wants to resolve ongoing controversies about Amazon's tax status when it comes to collecting sales taxes on purchases made by its Tennessee-based customers.

The governor has previously said he backed the agreement struck by his predecessor, Phil Bredesen, in which Amazon would not have to collect such taxes if the company built the warehouses in Bradley and Hamilton counties.

Internet retailers can't be compelled to collect sales taxes if they have no physical presence in a state, under a 1992 U.S. Supreme Court decision. Critics argue the Amazon retail centers constitute enough physical presence, an argument Tennessee Attorney General Bob Cooper has said has merit.

In his comments, Haslam said, "We'd like to work out some arrangement that works for them to stay and grow in Tennessee and yet for us to collect the sales tax that we need. ... We would hope to do something prior to the legislature coming back" in January.

Haslam spokesman David Smith on Thursday rejected questions about whether the governor is flip-flopping and trying to renegotiate a previously agreed-to deal.

"I'd say he's negotiating a new relationship in the context of a potential expanded presence," Smith said Thursday evening, referring to Amazon's announcement last month it is leasing space just outside Nashville in Lebanon to open a 500,000-square-foot "fulfillment center."

Former Tennessee Gov. Phil Bredesen

Former Tennessee Gov. Phil Bredesen

Amazon already plans to hire about 1,200 full-time workers and more than 2,000 part-timers at the Enterprise South industrial park site in Hamilton and the other center in Bradley.

The previously struck Bredesen deal has touched off legislative and legal threats from critics.

House Majority Leader Gerald McCormick, R-Chattanooga, in whose district the other Amazon center is going, said he spoke with the governor earlier this week.

McCormick's take on what's under discussion is getting Amazon to agree that its exemption from sales-tax collections would be temporary, lasting several years instead of permanently.

He noted Amazon already backs resolving the entire Internet taxation issue at the federal level. That could be be pushed during the time Amazon is exempt from collecting state sales taxes.

If Amazon supports that, McCormick said, he could go along with it. Doing so would benefit Amazon, ending any number of woes the company faces in Tennessee, the House leader suggested.

"They're not in the business of legislative battles and legal battles," McCormick said, alluding to legislative efforts this past session to force the company to collect sales taxes and threats by traditional retailers to sue if the company doesn't. "They're in the business of selling things."

If Amazon supports that, McCormick said, he could go along with it. And if Amazon isn't?

"I think we stick to the deal that we made; we don't break the deal," McCormick said. "But I don't think we'll have to. I think they're a good corporate citizen and want to come to a conclusion on this so that it's no longer a distraction to them or the legislature or the governor."

Amazon spokeswoman Mary Osako did not respond to two e-mails Thursday about the issue.

Sen. Andy Berke, D-Chattanooga, was surprised by the governor's comments. He said that when it comes to economic development, "it's critical that we keep our word. And if we don't, we look like a banana republic."

But Berke said if Haslam reaches a deal with Amazon, "then that's their [the company's] prerogative. We just want to make sure that we don't jeopardize jobs and future economic development opportunities through our legal actions."

The Alliance for Main Street Fairness, a national coalition of brick-and-mortar retailers including Wal-Mart, is hounding Amazon across the nation on the sales-tax collection issue. The group says it puts their members at a competitive disadvantage because their members still have to collect sales taxes.

"We appreciate Gov. Haslam's understanding that it is harmful to Tennessee and unfair to local businesses for one online-only retailer to get a special deal that exempts them from collecting sales taxes rightfully owed to the state," said Mike Cohen, a Knoxville-based spokesman for the group. "Tennessee retail businesses that collect sales taxes 365 days a year should not have to wait even one day longer to compete on a level playing field with Amazon.com."