TN House Finance Chair Wants Amazon to Collect Sales Taxes

Rep. Charles Sargent, R-Franklin, plans to push legislation geared toward forcing Amazon.com to collect sales taxes. But he also wants input from Tennessee Gov. Bill Haslam and the legislative leadership on the issue.

Sargent is chairman of the House Finance Ways and Means Committee. While attending the Southern Legislative Conference in Memphis Monday Sargent told TNReport he is “very happy” with a recent opinion by state Attorney General Robert Cooper, who opined that the kind of distribution centers Amazon wants to put in Tennessee do qualify as nexus — or sufficient retail presence — to warrant having to collect the tax. Cooper also said the legislation offered by Sargent and Sen. Randy McNally, R-Oak Ridge, would be constitutionally defensible.

Sargent said he and the others would be studying the issue in the next 90 days.

“I want to get with the Treasurer (David Lillard) and the leadership and the Speaker (Beth Harwell) to see how they would like to proceed on this,” Sargent said. “Senator McNally and I will work on that and see where the governor and the leadership would like to go.”

But Sargent made his personal desire clear.

“I am definitely looking at proceeding on it,” he said. “We had a half-hour discussion this morning on this (at the legislative conference). At some point in time we’re going to have to do something to be fair to all companies in the state of Tennessee.

“So my initial reaction is, yes, I’d like to proceed on this, but I want to make sure we have the backing of the governor and the leadership in general.”

Sargent had used some of the strongest language of any legislator to express his opinion on Amazon, even as the legislation’s sponsors were pulling back their bill in this year’s session, in part to hear from the attorney general.

“We can find no legal basis for this alleged agreement. None,” Sargent said in a subcommittee meeting in May. “Nobody is above the law, and nobody can cut deals to circumvent the law.”

The Amazon deal had been struck by members of the administration of Gov. Phil Bredesen, whose term ended this January. But many lawmakers, especially those in the Chattanooga area where Amazon is building two distribution centers, have expressed support for allowing the company to skip collecting the tax.

McNally recently suggested allowing Amazon a two-year “grace period” before a requirement to collect the tax kicks in, and Sargent said Monday, “I can live with that to get their expenses recouped, some of the costs and things of that nature.”

But Haslam has said such a move would leave the situation too uncertain. The governor has repeatedly called for a national solution to the issue. But Haslam also acknowledges that Congress looks reluctant to act because it would look like it would be advocating raising taxes, leaving states to continue to deal with the issue. Amazon itself is on record as saying it would be best to have a national solution.

Sargent said Monday some of Amazon’s arguments against the deal are unfounded.

“They are collecting in five or six states right now,” Sargent said. “So it does fit the business model. They say it doesn’t fit their business model, but if they’re collecting in five or six states it does fit their business model.”

Amazon currently collects the taxes in Kentucky, Kansas, New York, North Dakota and Washington.

The company has said it may put other distribution centers in Tennessee, with possible sites in Nashville or Knoxville. New facilities would potentially complicate the issue since Amazon would get the break on its first two sites but possibly not the others.

“We cannot be held hostage because they say, ‘We’ll build two more facilities if you don’t tax us,’” Sargent said. “That’s not the way we should be running this.”