published Tuesday, April 24th, 2012

Amazon.com sending tax notices to Tennessee customers

Debbie Harp stocks the shelves at the Amazon Fulfillment Services facility in Bradley County, Tenn.
Debbie Harp stocks the shelves at the Amazon Fulfillment Services facility in Bradley County, Tenn.
Photo by John Rawlston.
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Site to which Amazon sends Tennesseans for more information on the use tax and to pay any taxes: https://apps.tn.gov/usetax

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Amazon has begun emailing notices to all its Tennessee customers that they may owe taxes on their purchases.

The action by the online retailing giant easily involves thousands of Tennesseans, and it could spur some people to pay the tax that's often overlooked or ignored by consumers.

"It would be extra money for the state," said Billy Trout, a spokesman for the Tennessee Department of Revenue.

Amazon's move stems from a provision included in a law signed by Gov. Bill Haslam about a month ago. Haslam and the Seattle-based retailer agreed to a deal over collecting sales taxes on goods sold in Tennessee.

The law compels Amazon to begin collecting sales tax on items sold to Tennessee buyers in 2014. It's estimated the tax could generate $22.8 million for the state and $9.6 million for local governments. However, the notification provision required of Amazon wasn't widely known.

Haslam spokesman David Smith said consumers have been required to pay "consumer use" tax to the Tennessee Department of Revenue when making an online purchase from any retailer that does not collect sales tax.

"The notification they may owe the use tax is an in-between step until Jan. 1, 2014, when responsibility for collecting and remitting the Tennessee tax will shift to the company," Smith said in an email.

Scott Stanzell, an Amazon spokesman, said the notice applies to everyone who lives in Tennessee and bought from the company last year. Amazon has 60 days to issue the notice and comply with the law. Next year and in 2014, the notice is due Feb. 1.

"As you may know, Amazon.com LLC is not required to collect sales or use taxes in Tennessee," the notice says. "However, the state of Tennessee requires us to provide the following notice to you."

The notice breaks down the various company channels by which a consumer may have purchased goods through Amazon, including amazon.com, endless.com, myhabit.com, amazonwireless.com and smallparts.com.

In addition, the notice is required to provide a link to the state Department of Revenue's consumer use tax return website, which explains the consumer use tax, who should file and how.

According to Amazon, the company does not provide individual consumers' total purchase figures to the state. Amazon declined to say how many notices the company is sending out and would not give a 2011 sales figure for Tennessee.

Amazon struck a deal with the administration of former Gov. Phil Bredesen to build massive distribution centers in Hamilton and Bradley counties. However, that angered traditional retailers, and several powerful lawmakers revolted.

Haslam announced last October that a new deal with Amazon would exempt the Internet retailer from collecting Tennessee state and local taxes until 2014 or until Congress enacts a federal law authorizing states to require sales tax to be collected on Internet sales.

Danny Diaz, a spokesperson for the Alliance for Main Street Fairness, said in a statement that telling consumers that they have an unmet tax liability is not the same thing as meeting that liability on their behalf as every other retailer in Tennessee is forced to do.

"Amazon.com says it's too complicated to collect the tax; however, it is not too complicated to send notices to all the people who owe that same tax?" he asked.

Diaz said Amazon is "still taking advantage of a government-sponsored loophole to undercut their Main Street competition."

Contact staff writer Mike Pare at mpare@timesfree press.com or 423-757-6318.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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