State, Amazon discuss Internet retailer collecting sales taxes

Monday, August 1, 2011 at 12:19pm

State officials are negotiating with Amazon on a new deal under which the Internet retailer could agree to collect Tennessee sales taxes from its customers at some point in the future, House Majority Leader Gerald McCormick says.

McCormick, R-Chattanooga, said Monday he expects an agreement to be reached before next year’s legislative session when some lawmakers have threatened to push a bill to require Amazon to collect the tax for online purchases.

“Amazon is in discussions with the [Tennessee] Department of Revenue on the sales tax collection issue,” McCormick said. “I do think that, in the end, they will be a taxpaying entity in Tennessee and pay our sales tax, not immediately, but I think at some point they will pay the sales tax.”

The governor’s office said “discussions with Amazon are ongoing” but wouldn’t elaborate. Amazon did not respond to a request for comment.

Under a deal with Gov. Bill Haslam’s predecessor, Phil Bredesen, Amazon agreed to locate two distribution centers in southeast Tennessee if the state wouldn’t require the retailer to add the sales tax to customers’ bills. After taking office in January, Haslam said he would abide by that agreement.

That set off a controversy in last year’s session, with brick-and-mortar retailers like Wal-Mart saying the exemption puts them at a competitive disadvantage.

Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, sponsored legislation to require Amazon to collect the tax. Since the session, he has proposed that the state give Amazon a two- or three-year grace period before requiring the tax collections.

Last week, Amazon announced plans for a third Tennessee distribution center — this one in Lebanon. The company said the facility will create hundreds of full-time jobs and that it plans to open the site this fall.

Many other states are in disputes with Amazon over sales taxes. On Friday in Congress, Sen. Dick Durbin, D-Ill., introduced legislation requiring Amazon to add sales taxes to customers’ bills. Rep. John Conyers Jr., D-Mich., plans to introduce a similar measure in the House.

5 Comments on this post:

By: JohnGalt on 8/1/11 at 10:34

I thought Amazon had been pretty clear. Require us to collect your taxes and we move. I wonder which part of this Mr. McCormick doesn't understand. Although it is probably difficult for him to understand since he still thinks he will be requiring Amazon to pay taxes rather than collect and remit.

By: tomba1 on 8/1/11 at 1:22

here we go again. another so called reporter mouthing off without doing any homework. the state does NOT require anyone to charge and/or collect sales tax. The law only stipulates that businesses PAY the sales tax. It's up to the business to determine where that money comes from. the dept of revenue reporting form deals with total revenue, including shipping costs, reduced by interstate sales and other deductions resulting in the amount of intrastate sales which are taxable. do the calculation and pay. the stste doesn't care where the $ come from and whether the business passes the cost on to the consumer is of no concern to the state.

so, amazon now prices stuff based on their cost, plus their markup, plus a shipping factor and that's what the purchaser pays. That's right, free shipping a'int that free. So why not add in a tax factor as well and pay every state what they are entitled to and stop all of these legal and political hassles. that's what they do for shipping. they don't have to itemize the charges or disclose them to the purchaser. so they can continue to make everybody feel good as if they are paying nothing for shipping or taxes.

c'mon reporters ... do some work and dig into the story and there is no telling what you might really find out.

By: willtw on 8/2/11 at 3:29

Under a deal with Gov. Bill Haslam’s predecessor, Phil Bredesen, Amazon agreed to locate two distribution centers in southeast Tennessee if the state wouldn’t require the retailer to add the sales tax to customers’ bills. After taking office in January, Haslam said he would abide by that agreement. HONOR the committment! Walmart calling the kettle black? After they put out of business thousands of small businesses? HEY WALMART, SHUT YOUR PIEHOLE!!!!

By: BenDover on 8/2/11 at 7:43

Tennessee would do well to lobby the other side of this argument about online sales tax considering its centralized distribution hub advantage and that little $40Billion dollar a year distribution company we have down there in Memphis.

By: Volfan12 on 8/4/11 at 1:34

This is ridiculous that there is an argument. We are in the middle of a recession, mom and pop and other brick and mortar stores are being forced to close their doors and we want to give a multibillion dollar corporation a tax advantage. Makes no sense.