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Regional & National

Deal reached: Amazon to collect TN sales tax, add centers, jobs

October 6th, 2011 4:54 pm by ERIK SCHELZIG

NASHVILLE (AP) — Gov. Bill Haslam and Amazon.com announced Thursday that the online retailer has agreed to begin collecting Tennessee sales taxes in 2014, build two more distribution centers and generate 2,000 full-time jobs.

Seattle-based Amazon.com Inc. said it will invest $350 million in Tennessee over the next three years.

Haslam said the deal keeps 1,500 jobs at distribution centers in Cleveland and Chattanooga, confirms 500 jobs will be at a previously announced center in Lebanon and adds 1,500 jobs at the new facilities.

Sites for the new centers haven't been announced, though the governor said he expects them to be located close to each other.

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.

The governor was flanked by a bipartisan group of lawmakers during the press conference, and the Republican speakers of both chambers praised the deal.

"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."

Groups representing brick-and-mortar retailers who must collect sales tax at their Tennessee stores expressed disappointment that Amazon won't be doing the same sooner. Jason Brewer of the Retail Industry Leaders Association called the arrangement a "job killer for retailers in Tennessee."

"The deal negotiated by Governor Haslam has severely handicapped the retailers that currently employ over 300,000 workers in his own state," Brewer said in an email.

Amazon lobbyist Paul Misener said at the news conference that 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.

Amazon.com was originally granted an indefinite waiver on collecting state sales taxes as part of a deal struck by Haslam's predecessor that led the company to build its first two distribution centers in Tennessee this year.

Retailers quickly opposed the deal, saying it gives Amazon an unfair price advantage. Lawmakers also raised concerns about eroding Tennessee's revenue base, which depends heavily on sales taxes and doesn't have a broad-based income tax.

Haslam, a Republican, had walked a political tightrope on the Amazon deal by both claiming to honor Tennessee's economic development commitments while also working to revise the arrangement. A Republican bill that would have forced Amazon to collect sales taxes was delayed after the governor said it would be "disingenuous" to renege on the deal.

Pressure to come to better terms increased after Amazon agreed to begin collecting state sales taxes in South Carolina and California in the coming years.

Haslam said Thursday he didn't have any regrets to agreeing to the original terms before he was sworn into office in January.

"The world has changed since that point in time," Haslam said. "They've agreed to expand and build a bigger presence, the national situation has changed, our Legislature weighed in with a voice."

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.

Hagerty said the Amazon deal includes unspecified state funding for jobs training and infrastructure, but no other invectives beyond those the company qualifies for under state law.

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.

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