Amazon agrees to collect Tennessee sales taxes, build new centers

10/7/2011

Gov. Bill Haslam announced Thursday he has reached a deal with Amazon.com for the online retailer to begin collecting Tennessee sales tax in 2014 and add 2,000 full-time jobs at two new distribution centers.

Loudon County has approved an economic package in hopes of luring one of the centers, referred to for months in development circles as "Project Tango."

Amazon said it will invest $350 million in Tennessee over the next three years. The sites of the new distribution centers have yet to be decided.

Haslam said he will introduce legislation next year to solidify the deal, in keeping with a state attorney general's opinion issued this week that the executive branch can't unilaterally waive tax collection requirements.

"This isn't a new tax, this tax was already due," Haslam told reporters after the announcement. "This was just a question of Amazon collecting it themselves."

Amazon.com Inc. was granted an indefinite waiver on collecting state sales taxes as part of a deal that led to the company's first distribution centers in Tennessee. Amazon had previously announced it will employ more than 1,500 workers full time at Tennessee facilities in Cleveland, Chattanooga.

The company will hire up to 500 more full-time workers at a facility in Lebanon, and 1,500 more at the new distribution centers, Haslam said.

The governor said he expects the two new distribution centers to be closely located to each other. Economic and Community Development Commissioner Bill Hagerty confirmed the new Amazon facilities are the same "Project Tango" for which several counties have been proposing tax incentives in hopes of luring the investment to them.

In August the Loudon City Council and Loudon County Commission endorsed an economic incentive package for Tango that featured a million-dollar investment and a 10-year, 50 percent tax break. Authorities hope Amazon will build a 1 million square foot distribution center.

Amazon lobbyist Paul Misener said the company will continue to push for a federal sales tax law to cover all online retailers.

"The sales tax issue must be resolved in Congress," he said. "It's the only way the state of Tennessee will be able to obtain all the sales tax revenue that can be collected for the state."

Haslam estimated that Amazon accounts for about 10 percent of forgone sales tax revenues from online sales.

Seattle-based Amazon has been spending heavily on expansion. When it reported earnings on July 26, the company had announced plans to build 15 new order-filling centers and said it expected to expand further.

Source: Knoxville News Sentinel