Tenn. Lawmakers Debate Amazon's Sales Tax Breaks

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Amazon.com is trying to find a state that will allow it to build distribution centers without making it collect sales tax from customers in that state. The online giant already pulled out of deals in Texas and South Carolina after lawmakers tried to force sales tax collections. Amazon has several distribution centers in the works for Tennessee. The General Assembly is weighing the creation of thousands of jobs against sales tax revenue.

STEVE INSKEEP, host:

Amazon.com is not anywhere technically, but it's finding harder to avoid charging sales tax. The Internet retailer is under pressure, especially from states where it's building new distribution centers.

From member station WPLN in Nashville, Blake Farmer reports.

BLAKE FARMER: Amazon plans to build two warehouses in Tennessee, with more in the works. Politicians love the new jobs. But the online superstore is asking a lot of a state with no income tax, says state Senator Joe Haynes, questioning company lobbyists.

State Senator JOE HAYNES (Democrat, Tennessee): It almost seems like somebody is playing games with us, because you know that our tax base is based on our sales tax revenue.

Unidentified Man: Yes, sir.

FARMER: The legal question for states is whether distribution centers constitute something called nexus. The Supreme Court has ruled retailers with a physical store have to collect sales tax from online customers there. Amazon's Braden Cox admits warehouses are a gray area. But he accuses states of reaching for revenue.

Mr. BRADEN COX (Amazon.com): Nexus laws really are, in some ways, because you can't tax someone out of state directly, you find some sort of area in which they might have some sort of contact with the state.

FARMER: Traditional big-box competitors, like Wal-Mart, have been lobbying hard for states to treat Amazon just like them. Laura Bishop is Best Buy's lobbyist.

Ms. LAURA BISHOP (Lobbyist, Best Buy): We see this as an emerging issue for the state and their state budgets, and we want to make sure the state upholds their laws.

FARMER: But lawmakers see a lot to lose. Amazon pulled jobs out of Texas and South Carolina when pushed on the sales tax issue. With rumblings in Tennessee, one Amazon official retorts: Why not go to Indiana, where we're welcome?

For NPR News, I'm Blake Farmer, in Nashville.

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