A proposed Tennessee Revenue Department rule that would require out-of-state retailers to begin collecting Tennessee sales taxes on items sold here is pitting state-based retailers who use the internet, catalogs and cable to sell across the country against traditional brick-and-mortar stores that don’t.
Further from the Times-Free Press:
At a departmental hearing on the proposed rule Monday, opponents testified against the plan to require remote sellers with no physical presence in Tennessee to begin collecting sales taxes from in-state buyers in 2017.
States like Tennessee require in-state retailers to collect state and local sales taxes. But two U.S. Supreme Court decisions, the second one rendered back in 1992 before the explosion of the internet and internet commerce, bar states from requiring sellers with no physical presence in their state to collect sales taxes.
While representatives for traditional brick-and-mortars didn’t testify, they filed letters in support of the proposed rule, which would require out-of-state vendors who sell to Tennesseans to charge state and local sales taxes that can hit 9.75 percent.
Opponents’ chief concern is that other states may retaliate.
“While the rule appears to be targeted only at out-of-state sellers, it could actually cause a boomerang effect that would bring real and serious harm to retailers and businesses right here in Tennessee,” said a group of five businessmen and businesswomen in a letter to the Department of Revenue.
They warned the Haslam administration’s proposed regulation “would encourage other states to impose similar obligations on Tennessee businesses that sell to customers in other states — a situation that could lead to a chaotic patchwork of tax regulations and laws that reach beyond state borders and into Tennessee.”