Online Sales Tax Debate Heats Up In Tennessee

A great perk of online shopping is not having to pay sales tax most of the time. But while it’s great for consumers on one end, it’s hurting the amount of revenue that the state and federal government can take in. Amazon.com is considering cutting its partnership with affiliates in more states that are requiring the online retailer to collect sales tax, according to a report from Reuters.

On the other hand, Best Buy believes that pending online taxation reforms will make it more fair for brick-and-mortar retailers who already collect tax. Best Buy and other retailers like Sears have expressed concerns about the unfair advantage online-only stores like Amazon have when it comes to taxes, according to Reuters. The rules are that the online-only retailers don’t have to collect sales tax in states where they don’t have a corporate presence.

States including Illinois, Texas and California are all considering changing sales tax rules. Last October Texas sent a $269 million bill for uncollected sales tax to Amazon. According to the Chattanooga Times Free Press, Senate Finance Committee members there questioned Amazon officials about a sales-tax exemption agreement that were used in negotiations to build two distribution centers in the southern part of the state.

The Internet retailing giant also came under fire in Nashville from traditional brick-and-mortar retailers who asserted it was unfair to let Amazon avoid charging state sales taxes to its in-state customers while they continue to be required to collect the taxes. “Whether they’re actually something that can be upheld in state court. I don’t know that. But I know they were made in a business context, an inducement for us to want to come to Tennessee.”

Amazon agreed to spend $139 million in Tennessee to build two fulfillment centers which will employ around 1,400 full-time workers and thousands more part-time employees. Tennessee officials plan to make a decision on whether to move forward next week. Meanwhile, according to the Nashville Business Journal, a group of retailers is airing TV ads that protest the state’s sales-tax collection exemption for Amazon. The newspaper says Amazon will cancel its plans if legislation to collect taxes passes.

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