published Wednesday, August 17th, 2011

U.S. Sen. Bob Corker says Internet sales tax collections ‘will be resolved’

An employee works at an Amazon distribution center in Fernley, Nev.
Contributed Photo
An employee works at an Amazon distribution center in Fernley, Nev. Contributed Photo
Should the Feds settle the internet sales tax issue?
  • Yes. 43%
  • No. 57%

246 total votes.

CARTHAGE, Tenn. — U.S. Sen. Bob Corker said Tuesday it may take years before Congress enacts legislation letting states collect sales taxes to items sold over the Internet.

Corker, R-Tenn., said he realizes the sales tax issue “is a problem” not only for state and local governments but for traditional retailers.

“I have a feeling that, over the next three or four years, it’s something that will be resolved, I really do,” Corker told reporters following an address to the Smith County Chamber of Commerce.

Corker said he can’t say if he will support legislation sponsored by Sen. Dick Durbin, D-Ill., that would let states compel Internet retailers to collect sales taxes when they do not have a physical presence in a state.

“I don’t know,” Corker said. “I don’t know what the details of it are. I know that it [legislation] is actually changing right now.”

Tennessee Gov. Bill Haslam is grappling with a sales-tax collection controversy involving the state’s recruitment of Amazon to build distribution centers in Hamilton and Bradley counties.

The governor has said he is “more than willing” to take a national role in pushing Congress to act, but it appears Haslam has got his work cut out for him with just his home-state delegation.

Corker said that, while he has talked with Haslam some about the issue, “he has not mentioned that he may be taking a leadership [role], but we both have a lot going on.”

He said he was having dinner later Tuesday evening with Haslam and the topic likely would come up.

Amazon is spending $139 million to build two distribution centers in Hamilton and Bradley counties that will employ about 1,200 full-time workers and more than 2,000 part-time workers. Last month, the company announced plans to open a third center in Lebanon, Tenn., which the company says would employ “hundreds.”

The deal cut by previous Gov. Phil Bredesen to get Amazon into Tennessee involved a commitment that Amazon would not have to collect sales taxes. Under U.S. Supreme Court rulings, retailers with no physical presence in a state cannot be legally compelled to collect sales taxes.

But Haslam is now pressing Amazon to voluntarily let that commitment expire after several years.

According to the University of Tennessee’s Center for Business and Economic Research, Tennessee state and local governments will lose out on an estimated $410 million in tax revenue because of overall Internet sales.

Earlier this week, a top official at Chattanooga-based CBL and Associates, one of the nation’s top mall operators and the developer of Hamilton Place, said that while CBL welcomed Amazon to Chattanooga, traditional retailers were disadvantaged because they must collect state sales tax of 7 percent and local option sales taxes of up to 2.75 percent in Tennessee.

A former Chattanooga mayor and developer, Corker said he has built malls and recognizes the problems traditional retailers face when it comes to competing against Internet retailers.

“The brick-and-mortar stores have turned out to be places where people look at the product and try it on and see if it works for them,” Corker said. “And then they go to the Internet and actually buy the product without sales taxes. Obviously, that’s unfair.”

Efforts to obtain positions on the issue from several other Tennessee lawmakers were unsuccessful.

Republican U.S. Sen. Lamar Alexander’s office did not respond Tuesday to a request for comment about the Durbin bill. But back in 2003, Alexander, a former Tennessee governor, was quoted by the Chattanooga Times Free Press as backing a similar effort that ended up going nowhere.

U.S. Rep. Chuck Fleisch-mann’s spokesman Jordan Powell said via email that the Chattanooga Republican “will be discussing the details of this important issue with Governor Haslam and [state House] Majority Leader [Gerald] McCormick next week.”

McCormick, R-Chattanooga, has said federal action is necessary, but he also has said that pending such action, he believes Amazon will cut a deal with the state to begin collecting sales taxes at some point. If Amazon does not agree, McCormick has said he will defend it against state efforts to force it to collect the taxes.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
nucanuck said...

In-state bricks-and-mortar retailers should refuse to collect sales tax on the on-line portion of their sales and force the State into the courtroom to try enforce an impossibly unfair policy.

On-line sales from Best Buy, Sam's, Costco, Sears, Walmart...are no different from Amazon. In every case they ship out of a warehouse, not from a storefront. Treat all on-line sales the same...either tax them or not...but don't exempt only one.

August 17, 2011 at 2:22 a.m.
tollettja said...

nacanuck, When I buy from Wal-mart I can pickup my item from the local Wal-mart I don't know about the others. The difference here is that Amazon is NOT SELLING in the state as a bricks-and-mortar retailer they are only distributing. All the others you mentioned ARE selling within the state. I remember buying form Dimension2000 a Computer Manufacturer before they were in the state and they were not required to collect sales tax but once they were a sales presence in the state I had to pay sales tax. Also, Amazon does collect sales tax if they are selling for some of their partners it just isn't mentioned often. But what they collect goes to those partners to pay to their respective city and state.

No, I don't think Amazon should collect sales tax if they are not selling within Tennessee but once they DO sell (i.e. if they open a store even for their employees to purchase) then that is when they should start collecting sales tax. If one Governor made a promise to honor a no sales tax collection requirement for Amazon any following Governor should abide by that agreement. It had to have had the backing of the Senate for him to offer that agreement as well. So they should also keep their hands off. Besides the benefit out ways the loss of revenue it gets people back into the job market they are earning and buying from local stores(paying sales tax) and there is less unemployment being paid out by the state. It's all good so leave it alone...

August 17, 2011 at 4:33 p.m.
TicketWilliam said...

While this might be a national issue down the road, Amazon's sales tax is a current issue in Tennessee. I agree with nucanuck, all online sales should be treated the same. The government should not be allowed to pick winners or losers.

August 17, 2011 at 4:54 p.m.
rolando said...

Amazon should stop construction on their buildings or sell them and accept the loss.

Then charge extra to ship to Tennessee...

August 17, 2011 at 6:04 p.m.
rolando said...

Sorry for the multiple postings

August 17, 2011 at 6:08 p.m.
rolando said...

Just what we need...more nanny government sticking their dam*able nose into places it doesn't belong.

Our state government, like its Big Brother national legislature, doesn't give a poot about its taxpaying citizens. Amazon should stop construction on their buildings or sell them and accept the loss and get the h out of dodge, taking their jobs with them.

Then charge extra to ship to Tennessee to pay for their loss...

August 17, 2011 at 6:08 p.m.
Humphrey said...

I was in best buy today, they "price match" competitor prices. But they won't price match because they are an internet only company and do not have a local store.

August 17, 2011 at 8:25 p.m.
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