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.

NASHVILLE _ Brick-and-mortar retailers contend a new Tennessee attorney general opinion establishes that Amazon must begin collecting state sales taxes once it opens two distribution centers.

The only way to prevent that is for state lawmakers to enact legislation specifically exempting the Internet retailer from the requirement, they say.

"The AG opinion effectively reverses the situation in the legislature," said former state Deputy Attorney General Bill Hubbard, who represents major national retailers, in a statement. "The burden is on Amazon to have to pass a bill in order to have a sales tax exemption."

State Attorney General Bob Cooper issued the opinion today as Amazon nears completion of two giant warehouses in Hamilton and Bradley counties.

In the opinion, Cooper said current law requires retailers with a distributing house or a warehouse to collect sales taxes.

But Cooper qualified that substantially, saying that if the facility is owned by a retailer's subsidiary, "nexus" or physical presence "is established only if the subsidiary's in-state activities are significantly associated with the retailer's ability to establish and maintain a market in Tennessee for its sales."

In a meeting with local lawmakers earlier this year, Frederick C. Kiga, Amazon's director of tax policy at Amazon, said the distribution centers are set up separately from Amazon. They serve as "drop shippers," providing services to out-of-state retailers, he said.

"The distribution centers are separate entities. They do not establish or maintain a market for an Amazon retailer there," Kiga said. "People cannot walk up to a facility and, you know, pick up their goods."

In his opinion, Cooper said the state revenue commissioner cannot waive sales tax-collection requirements for a company where the "Retailers Sales Tax unambiguously establishes obligation to pay such taxes."

That has been a major argument by critics, who say the state is trying to do just that.

But the opinion adds substantial vagueness to the matter, noting the revenue commissioner "possesses substantial discretion in determining the best measures to take to enforce Tennessee's tax laws."

Tennessee Attorney General Bob Cooper

"The exercise of such discretion is particularly appropriate where the enforcement of a tax may be debatable," the opinion says.

Gov. Bill Haslam, who has said he accepts the agreement then-Gov. Phil Bredesen struck with Amazon, later told reporters earlier today, "I literally just heard that we got it so I haven't seen the AG's opinion so I don't really have a whole lot to say new on that.

"We continue to have discussions with Amazon," Haslam said of ongoing talks aimed at persuading Amazon to collect taxes despite the deal. "Hopefully, we can come up

with something that works for everybody sooner rather than later."

He conceded that it could be "one of the outcomes [is] that we'd have to have some

legislation passed to set up whatever the new arrangement is."

The opinion was issued in response to questions posed by Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, and House Finance Committee Chairman Charles Sargent, R-Franklin. Both men are critical of the deal in which tBredesen agreed not to compel Amazon to collect state sales taxes if the Internet retailing giant built two giant distribution warehouses in Hamilton and Bradley counties.

Those facilities are nearing completion.

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