Tennessee strikes deal with Amazon

Tennessee and Amazon have agreed to a deal similar to the one between California and Amazon. This deal requires Amazon to begin collecting sales tax for the state in 2014—unless federal legislation on online sales tax has passed by then—and the company will create 3500 full-time and several thousand seasonal jobs in the state. This Missouri News Horizon article has the details.

The agreement comes after years of back-and-forth between Amazon and the Tennessee government. Former governor Phil Bredesen, who preceded current governor Bill Haslam, made a deal for Amazon to bring several distribution centers to Tennessee, creating 1500 jobs, in exchange for an exemption from collecting state sales tax. There had been strong objection to that deal from local Tennessee retailers and others, and there was some question as to whether Haslam, once elected, would uphold the deal made by Bredesen:

The new agreement is a dramatic shift from the original deal struck by the state with Amazon, in which former Gov. Phil Bredesen and his team evidently agreed to allow Amazon to forego collecting sales taxes in exchange for creating hundreds of jobs with distribution centers in Hamilton and Bradley counties.

Haslam had agreed to honor that original deal, and state officials Thursday insisted the new agreement does not mean the state has gone back on its word. . . .

“I’ve been asked several times over the course of the last couple of months if working on an agreement like this is doing what we said we would do as a state. The answer is yes,” Haslam said. “The scope of the project has changed, with the addition of newly planned facilities here, and that conversation in the Legislature and in states across the country has had an impact.”

The agreement won’t apply if federal legislation is enacted before 2014:

Haslam said the agreement applies unless a national solution, which would bring all states under the same framework on state sales tax collections, comes first. Many people believe Congress should act to make application of sales tax law the same for online and traditional retailers.

Tennessee Governor Bill Haslam has spoken publicly in support of the Main Street Fairness Act in the past, and he mentioned it again during the announcement:

“Of the online retail sales where tax is not being collected Amazon is only about 10 percent of it,” Haslam said, adding that that is why he has called for a national solution. “It’s not just about Amazon.”

Paul Misener, Amazon’s vice president for global public policy, was present at the announcement and also made a statement that included strong support for federal legislation:

The Amazon executive said his company supports efforts to streamline sales tax collections nationally.

“The sales tax issue must be resolved in Congress,” Misener said. “It’s the only way the state of Tennessee will be able to retain all the sales tax revenue that can be collected for the state.

“We are committed to going to Washington with the state’s leaders, both here in Nashville and also in Washington, to obtain that sales tax legislation as soon as possible.”

With all this vocal support for the Main Street Fairness Act from both Amazon and state legislators, there seems to be a general consensus that federal legislation is the best solution for everyone. But in its absence, states will do whatever they can to try to make sure sales tax is collected online as well as in local stores.

We hope Congress is noticing the rapidly increasing support for the Main Street Fairness Act among state legislators. These are the people who work where the rubber meets the road and know exactly what their states and communities need to function properly.

Unfortunately, in this case they are not the ones who have the power to make sure states and communities get what they need. That’s Congress. But members of Congress need to listen to what local and state legislators are telling them and then put their support behind Main Street Fairness Act.

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