Legislation aimed at forcing Amazon.com to collect sales taxes from Tennessee customers when it opens shipping centers in their state was shelved until January on Wednesday.
Paul Misener, vice president for global public policy for Amazon, declared the company “grateful to the committee for recognizing the jobs and investment that Amazon can bring to Tennessee.” The comment came after Sen. Randy McNally, R-Oak Ridge, formally deferred the bill (SB529) until January, 2012.
Earlier, Misener told the Senate Finance Committee that passage of the bill would have raised a “dark cloud” over opening Amazon “fulfillment centers” in Hamilton and Bradley counties now under construction, much less more tentative plans to expand into Knoxville and Nashville.
But the delay of the legislation until the new year still left questions hanging, some of them were raised in the committee hearing.
Misener testified, for example, that the deal negotiated by Amazon with officials of former Gov. Phil Bredesen’s administration only covered a guarantee that the company would not have to collect taxes on sales to customers living outside Tennessee.
He said negotiations are still continuing with the Gov. Bill Haslam’s administration, represented by Revenue Commissioner Richard Roberts, over an “alternative arrangement” agreement to assure that sales taxes need not be collected from Tennesseans, though they are “very close” to an agreement.

Roberts refused to comment on the agreements and Misener said Amazon would not release a copy of the “revenue letter” it has received that apparently outlines arrangements with the Department of Revenue.
Also, former Deputy Attorney General Bill Hubbard told the committee that current Tennessee law already requires Amazon to collect state and local taxes for Tennessee sales when it opens centers within the state and federal laws permit the taxation. He said that a deal negotiated to the exempt Amazon by the Department of Revenue would be legally invalid and that lawsuits are “a possibility.”
Hubbard is now representing, as an attorney, the Retail Industry Leaders Association, which supports the legislation and declares Amazon’s refusal to collect taxes gives the company an unfair advantage over in-state retailers who do collect taxes.
Misner said he disagrees with Hubbard, who “misconstrues the structure of our business.” Amazon argues that federal law and court rulings mean it does not have to collect taxes.
McNally, chairman of the Senate Finance Committee, and Rep. Charles Sargent, R-Franklin, chairman of the House Finance Committee, sponsored the legislation in question. Both said that a delay until January would allow more time to assess the legal ramifications.
Misner said Amazon “would love to bring to Tennessee several fulfillment centers.” He said announced plans to consider warehouse in Knoxville and Nashville would mean “another 1,500 jobs and $140 million in investment.” Investment in the already-under-construction Southeast Tennessee facilities totals about $140 million.
After the committee meeting, Misener initially nodded his head in the negative when asked by a reporter if the possibility of legislation being enacted next year would prompt Amazon to delay expansion to Knoxville and Nashville until the matter is resolved.
He then declined to elaborate on the Knoxville or Nashville plans beyond saying, “We are anxious to come to Tennessee full bore” and, when asked about timing of a Knoxville expansion, “We’re working on it.”
The Tennessee delay came on the same day that South Carolina’s Legislature voted to reverse an earlier decision to mandate that Amazon pay taxes in that state and instead pass a bill declaring the company would not have to do so. Amazon then declared it would proceed with plans – cancelled after the first vote – to open a center in South Carolina.
Under questioning by Senate Speaker Pro Tempore Jamie Woodson, R-Knoxville, Misener acknowledged that Amazon had increased its pledge for investment in South Carolina to add “30 percent more jobs” than previously planned, before the earlier vote went against Amazon.
Woodson characterized the change as “an enhanced payoff” and said she was left wondering if a similar move could mean an enhancement of Tennessee investment.
“If one were cynical, it would leave a bad taste in my mouth,” she said.
Misener did not respond to Woodson’s comment. But he said he believes that South Carlolina legislators, when they voted earlier to mandate Amazon collect taxes, “thought we were bluffing” with threats to pull out of the state.
Misener told the committee that it would be “an impossibility” to properly collect sales taxes for all localities without enactment of federal legislation, which he said Amazon supports.