Amazon Fights to Keep Sales Tax Advantage in Tennessee

Iamazon fights Tennessee sales tax while building fulfillment centerst's no surprise that brick-and-mortar retailers continue to complain about the advantage that Internet vendors have: Not needing to collect sales tax in states where they aren't physically present.

However, for Amazon that advantage is even greater, as it has managed to beat the sales tax in states where it does have facilities. Now it plans to build two more in Tennessee and is working to secure agreement from the state so that it won't have to collect sales tax from Tennessee customers.

The company plans two new distribution centers near Chattanooga, at a cost of $139 million, that promise to provide 1,400 full-time and 2,000 seasonal jobs.Amazon has similar distribution centers in five other states, and has successfully avoided collecting sales taxes there by claiming that these are not retail locations but simply shipping points.

Amazon has asked the state of Tennessee for a similar arrangement. Local merchants there are protesting the request, however, claiming that granting it would be unfair.

Amazon has faced the same opposition in other states. Most notably, according to DailyFinance.com, Texas. It recently sent the company a bill for $269 million, representing uncollected sales tax from December 2005 through December 2009, with interest and penalties. The company has promised to vigorously fight the claim.

Look for more such conflicts, however, as many states fight to balance their budgets while suffering tax collection shortfalls.

Chances are, given the job climate, that Tennessee will accede to Amazon's request. But this doesn't mean that Amazon customers living in Tennessee wouldn't need to pay sales tax; it simply means that they would need to pay it directly to the state as part of their yearly income-tax filing.

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