Tenn. retailers oppose Amazon sales tax pass

NASHVILLE — Retailers ranging from a small bookstore to giant big box chains are lining up against Amazon and a sales tax break it wants from Tennessee.

Hanging in the balance is whether customers who live in Tennessee, and who buy from Amazon.com, will have to pay sales taxes on their purchases.

Opposition storeowners want Amazon to collect sales tax from Tennesseans even after the Internet sales giant opens two distribution centers in east Tennessee. They say other retailers with brick-and-mortar locations in the state collect taxes on their Web-based orders, and Amazon shouldn't get a free pass.

But state leaders might give the Internet Goliath just that as a "thank you" of sorts for the jobs the company will create at the distribution complex.

"I think that's unfair," said Laura Hill, co-owner of Reading Rock Books in downtown Dickson. "We also sell books online, and we have to charge sales tax. So why shouldn't they? Our state needs that money."

A Virginia-based group is working to call attention to what it calls the Amazon loophole and build opposition to it. Dubbed Alliance for Main Street Fairness (its website is StandWithMainStreet.com), it has bought full-page newspaper ads urging citizens to call Tennessee Gov. Bill Haslam to stop Amazon's gambit.

The opposition group could end up working with state lawmakers to require Amazon to collect the tax, said Daniel Diaz, a spokesman for Main Street Fairness.

"Small businesses are concerned about how they're being negatively impacted by the preferential treatment of online-only retailers," Diaz said. He declined to say where the group gets its funds to operate.

Although the alliance presents itself as looking out for the little guy, trade groups like the Retailer Industry Leaders Association, whose members include Best Buy, Target, Walmart, Dollar General and Home Depot, have worked with the alliance in other states and support its efforts here.

"A company the size of Amazon with $14 billion in sales should not be given a government-sponsored advantage over brick-and-mortar retailers," said Jason Brewer, a spokesman for Retailer Industry Leaders Association.

Up to now, Amazon (as a Web-only retailer) hasn't collected sales taxes on customers' orders in Tennessee — or in most other states. States can generally require Internet retailers to charge sales taxes to in-state customers only when it has a physical presence in that state.

Amazon executives have argued, though, that the Tennessee facilities would not be a retail outlet, but that the company would just be a shipper, thus exempting it from the tax collection requirements.

State revenue officials won't divulge taxpayer-specific information about the extent of any deal with Amazon, citing confidentiality laws, according to Sara Jo Houghland, spokeswoman for the State Department of Revenue.

Last month, Amazon announced it would build two huge distribution centers in southeast Tennessee. The 1-million-square-foot centers would be a $139 million investment and create 1,400 full-time jobs and employ more than 2,000 people seasonally once the centers are fully ramped up, according to the Chattanooga Times Free Press.

The issue of collecting sales taxes on Internet and catalog sales has long been brewing, and it's especially urgent now, with many state budgets strapped for cash.

Federal legislation was filed last year over the issue, and several states are mounting challenges, including in Texas, where Amazon was presented with a $269 million sales tax bill.

"Heck, no, they shouldn't get a special break," said Powell Phillips, owner of Phillips Toy Mart in Belle Meade. That would be like giving Toys R Us a break and not making it pay sales taxes, he said.

Bookseller Hill said she plans to contact the governor, and she'll urge others to do so, too.

She only recently became involved with the Main Street Fairness group through her membership in the American Booksellers Association, another national group lined up against Amazon.

"If you buy a book from them, and they don't have to charge (nearly a) 10% sales tax, that amounts to a government subsidy of our competitors," said Oren Teicher, CEO of the American Booksellers Association.

"I understand the economic development argument, and certainly Tennessee ought to do what it can to get jobs, but what about the retailers in Tennessee and all the folks they employ," Teicher said. The booksellers group represents about 1,500 locally owned stores.

One Tennessee lawmaker who deals with economic development issues said he expects Amazon to get its way.

"I find it difficult to believe they'd move to Tennessee without it," said Republican state Rep. Steve McManus, chairman of the House Commerce Committee.