Tennessee follows California with new Amazon tax deal

Tennessee follows California with new Amazon tax deal

Summary: We are starting to see Amazon work out tax collection deals state by state.

SHARE:

Tennessee is the latest state to work out a deal with Amazon in which the online mega-retailer will have to collect state sales taxes.

However, it won't be happening right away. The Associated Press reports that the regulation won't go into effect until 2014. So there's plenty of time to get some tax-free shopping done still.

The deal also promises to add 2,000 full-time jobs in the Volunteer State at new distribution centers thanks to a $350 million investment from Amazon. Locations haven't been selected yet.

The issue has been a hot one with merchants (online and offline) and consumers alike. From the Amazon point-of-view, not charging sales taxes offers a competitive edge on top of already bargain prices. In weak economy, this has proven especially enticing and helpful to consumers nationwide.

However, opponents to Amazon argued that it hurt small business owners who are required by law to pay sales taxes but sell the exact same products seen on the online megastore’s website.

South Carolina well as California recently have invoked similar mandates. However, the sales tax requirement will become effective much sooner in the Golden State as that bill does not require online merchants to collect sales taxes until September 15, 2012.

Related:

Topics: Banking, Amazon, Government, Government US

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

15 comments
Log in or register to join the discussion
  • Misrepresents the situation

    This is not a case of "working out tax collection deals state by state". The U.S. Supreme Court case said that if a company has no physical presence in a state the state cannot compel it to collect sales tax. If the company has a physical presence such as offices or a distribution center, then it has a "physical nexus" and is required to collect sales tax. The physical presence does not have to involve sale, production or distribution. For instance, if a nationwide company decided to set up an office solely to receive, process and pay employee and retiree benefits, that would still constitute a physical presence and the company would have to collect sales tax for that state.
    Rick_R
    • RE: Tennessee follows California with new Amazon tax deal

      @Rick_R <br><br>Yep. Not to mention, there is no income tax in the state of Tennessee (except for dividends and interest)
      UrNotPayingAttention
    • This is sale tax

      @Rick_R <br>Don't tell me there is no sale tax there. Like I said last week, other states will follow CA. If for no other purposes, deficit is forcing states to find new taxes.
      FADS_z
      • Politicians need to weened off their heroin

        They are like drug addicts, and taxes are their heroin.

        The more you give, the more they gobble up and take and waste.
        ScorpioBlue
      • Not necessarily &quot;new&quot;

        @FADS_z

        For a lot of states, sales tax has been around for decades. Ohio, for example, instituted sales tax back in 1936.

        The whole reason for the push to have Internet vendors collect the sales tax is because of the use tax scofflaws. Everyone harps about rich people paying "their fair share" of income taxes, & most of the anti-income tax advocates talk about instituting "flat taxes". Well, guess what: sales taxes are a flat tax that hits everyone equally: you pay X% of your purchase price as a tax on the sale. Whether you spent $50 or $50,000 on the item, the percentage of the sales tax is the same. But guess what? If the vendor doesn't collect it up front, most people won't pay the tax due themselves. A few people honestly forget (or don't even realize) that it's due; the majority, though, know it's due, but they get a thrill of "getting away with it".

        If anyone wants to see where that road leads, just look at Greece's financial situation right now (i.e. about 1 in 5 of their citizens & businesses don't even pay/report income taxes)...
        spdragoo@...
      • RE: Tennessee follows California with new Amazon tax deal

        @FADS_z Psssh with our idiot governor and worthless state legislature we could triple sales tax and institute a tax on breathing and still fall short of our budget. Can't believe that cow of a governor actually said that suspending elections on a federal level would be good for the country until we got this whole economy thing worked out.
        Str0b0
  • North Face

    <a href="http://www.realnorthface.com/"><strong>North Face Jackets</strong></a> is one of founding partners and inventors, supporting the nationwide initiative to mobilize youth in an outdoor movement.
    azsxa
  • Now wait a minute!

    Didn't Gov. Moonbeam repeal this stupid law? Didn't amazon welcome back it's California affiliates after this tax repeal?<br><br>C'mon, zdnet! Get your act together!
    ScorpioBlue
  • Delaying tactic

    There are multiple forces at work behind the scenes. Amazon is still betting that they can beat "non-nexus" taxes in the US Supreme Court. That leaves them with a strategy to move operations to states with smaller populations and lower income people that don't buy so much through the Internet. Hence, Tennessee. It's a perfect place to relocate to from CA and TX, who combined have *10* times the population and higher rates of internet buying.

    So Amazon may end up having to collect some sales tax, but it may be a few percentage points of what it would have to collect if all the states got a bite.

    Here's the hilarious part: states like Tennessee routinely offer companies like Amazon hundreds of millions of dollars in property and corporate tax rebates for building facilities in that state. Amazon could well be coming out net positive despite the sales tax deal!
    terry flores
  • RE: Tennessee follows California with new Amazon tax deal

    actually would have happened anyway, they were openning a place in chattanooga and cleveland, tn and would have fell under the brick and mortar rule. This just gave them a legal reason to postpone it well after they open up.
    ppb1701
  • RE: Tennessee follows California with new Amazon tax deal

    I live in Tennessee and for a state that doesn't believe in a state income tax, they sure tax the crap out of everything, 9.95%. I buy a lot from Newegg, who has the misfortune of having a warehouse near Memphis, I think? But I have to pay taxes to the state. (It's still cheaper than TigerDirect, shhh!)
    trust2112@...
  • RE: Tennessee follows California with new Amazon tax deal

    I think the US Constitution is quite clear:Article I, section 9, paragraph 5:
    No Tax or Duty shall be laid on Articles exported from any state.
    artfox
  • RE: Tennessee follows California with new Amazon tax deal

    Better yet: fix the problem the right way by revamping the State Sales & Use taxes and use GST instead. It would solve all of the Amazon type problems and add about 2% growth to the economy.
    lkujala
    • Wouldn't fix it.

      @lkujala

      GST is a VAT (Value-Added Tax). It's similar to a sales tax, but differs in that:
      -- sales tax is collected on the final purchase by the consumer; suppliers, distributors, manufacturers, and anyone else that doesn't directly use or consume the item prior to its final sale to the consumer is exempt from payment of the tax.
      -- VAT is collected at each stage in the process, from collection of raw materials to the final sale to the consumer; each entity applies for a refund of the difference between the tax they paid on their purchase and the value of the service or items they added to it.

      Supposedly, VAT is supposed to collect more money by making it harder for the end consumer to avoid collection of the taxes, since they're collected along the way. However, the downside is the extra cost to collect & remit the tax for those in the middle (i.e. suppliers, manufacturers, distributors, etc.), as well as the increased wage costs for the additional staff. Unfortunately, it appears that VAT can also be circumvented, & apparently is a big problem in the EU (since it's not supposed to be charged when items cross national borders).
      spdragoo@...
  • mkajmsn 51 xmf

    swwpoz,vpkhpxzk25, krjlo.
    cdsfwrryd25-24379020455775902408550383290231