Business and Economy Tax and Budget Transparency and Elections

Haslam Promises Openness On Amazon

Gov. Bill Haslam insisted Friday he has not changed his position on negotiations with on the collection of sales taxes and said whatever agreement might be struck with the retail giant the people of Tennessee would be informed about it.

Meanwhile, former Commissioner of Revenue Charles Trost, on whose watch the original Amazon deal was made in Tennessee, declined to comment Friday on details of the state’s current arrangement with the company. Current commissioner Richard Roberts, whom Haslam said is leading the talks for his administration, declined to comment on any talks as well.

Haslam says he wants Amazon to collect sales taxes on its transactions in Tennessee in the future, and his administration is involved in talks with Amazon on how to settle the issue of whether the company should have to collect the tax.

But Haslam’s predecessor, Phil Bredesen, struck a deal last year before leaving office where Amazon would not have to collect sales taxes as the company established large distribution centers in Hamilton and Bradley counties, bringing more than 1,000 jobs to the state. Amazon has since announced the addition of a distribution center in Lebanon

Haslam has said he planned to honor the Bredesen agreement, which was handled with little transparency and has stirred interest among some legislators concerned about the erosion of the state’s sales tax base. Legislators from the Chattanooga area, home of the first two distribution centers, have generally supported the Bredesen deal because of the jobs it creates.

Negotiations between the Haslam administration and Amazon have raised questions on exactly what the arrangement might become and whether it represents a shift in the state’s policy.

“Nothing has changed from the state’s commitment at all,” Haslam said Friday. “We are in ongoing discussions with Amazon. Everybody knows that. We’d love to see them grow more. Number two, there is quite a bit of discussion in the Legislature about exactly how that should work out.

“I wouldn’t be being honest if I didn’t say I’d love for them (Amazon) to collect sales tax.”

The governor has said all along he would like to get the definition of the state’s long-term relationship with Amazon nailed down. He has also said there needs to be a national solution to the issue of online retailers collecting sales taxes, and Amazon officials have said they believe a national approach is best.

But given the continuation of talks with Amazon, the future of the state’s arrangement continues to be scrutinized.

Trost, a Nashville attorney who replaced Reagan Farr as commissioner of Revenue last Sept. 10, would not comment on details of the Bredesen deal.

“I really am not in a position where I can,” Trost said. “The taxpayer confidentiality rules have put me in a position where I just don’t even want to start down the road talking about it.”

Trost said he is not even in a position to confirm that the deal was struck while he was commissioner.

“What’s in the public record out there, if you looked at the timing on it, when I was in office, you can draw your own conclusions,” Trost said.

“It’s just not a topic I feel comfortable talking about to the press or anybody else. It’s just … I’ve thought about this … I’m no longer the commissioner. There is a new administration. There is a new commissioner. The issue is still in the public domain for discussion. I think my best policy is not to add myself to the discussion.”

The Amazon arrangement was made late in Bredesen’s time in office. Bredesen informed the incoming governor, Haslam, of the deal with the explanation that if Amazon were not given the break on tax collections, the company might have put its facility in Georgia.

“I have the utmost regard for Governor Haslam, Governor Bredesen, my successor as commissioner and my predecessor as commissioner,” Trost said. “There’s a new group dealing with these issues, and I’m just not going to get into it. That’s the only position I can take.”

Roberts had a similar response.

“I can tell you that the state statutes prohibit me from discussing any taxpayer, whether it be you or Billy Bob’s Bait Shop or an unnamed major Internet retailer,” Roberts said. “Just as a matter of policy we simply can’t comment on individual taxpayers.”

Roberts said he cannot confirm that the administration is talking to Amazon.

“Our policy here requires that we maintain confidentiality. The reason is we have to give any taxpayer the confidence that what they file with us and their dealings with us will not wind up in the public domain. Until the legislature changes that — and I also believe it’s the right policy — I just simply can’t confirm or deny,” Roberts said.

Sen. Andy Berke, D-Chattanooga, speaking to reporters Friday, picked up on the issue of discussing the talks.

“I can’t quite tell what the governor’s position on this is, but we are making a mistake by talking about our discussions with Amazon without having some kind of firm agreement with them,” Berke said.

“One of the rules of economic development over the last several years is that we don’t talk about ongoing discussion. Now, if there’s going to be an agreement, we should have an agreement with them before we start talking about it.”

Two lawmakers have filed legislation that would require Amazon to collect the sales tax. When one of the sponsors, Sen. Randy McNally, R-Oak Ridge, suggested a two-year grace period on collecting the tax might be an answer, Haslam said that would leave the arrangement uncertain.

Haslam said Friday he has not personally had any direct conversation with Amazon, with Roberts taking the lead.

“We’re going to honor our commitment to them, but we would love to figure out a way long-term for them to pay (collect) sales tax and to build an employee base here,” Haslam said.

The issue has become ticklish for the state since it is highly interested in increasing the number of jobs in Tennessee, but there is a concern that it creates a double standard that hurts other retailers who collect the sales tax.

An opinion from state Attorney General Robert Cooper said distribution centers, like the ones Amazon is constructing, would present enough physical presence to require the tax collection and that the legislation sponsored by McNally and Rep. Charles Sargent, R-Franklin, would be constitutionally defensible.

Lt. Gov. Ron Ramsey has expressed frustration that he cannot learn the specifics of the Amazon deal, and at one time Ramsey attempted to meet with Matt Kisber, commissioner of Economic and Community Development under Bredesen, about the arrangement. But Ramsey has said he never got his answers from Kisber.

Haslam was asked Friday if, when an arrangement with Amazon is reached, the public would be informed what it is.

“Sure,” Haslam said. “You bet. You bet.”

Haslam was also asked about the time frame for a deal.

“It’s too early to say that,” he said. “We’re in discussions with them. I’d love to have some sort of agreement with them where we all do that by the time the Legislature comes back (in January). Remember, in the context of all this, there’s quite a bit of controversy in the Legislature about how this should go forward. So it’s not solely an administration decision what happens here.

“We’d love to come to an agreement that works where the Legislature says, ‘OK, that’s the right approach for the state of Tennessee long-term,’ and Amazon says, ‘Great, we can live with that, and we will grow and expand in Tennessee.'”

A call Friday to the media office at Amazon’s corporate headquarters was not returned.

Haslam said he does not believe the attorney general’s opinion has changed the administration’s approach to the issue.

“Obviously, the Legislature is a major factor in what gets worked out with anything in the state of Tennessee. It’s not different with Amazon than any other item, and so I think Amazon is aware of that,” Haslam said.

“We’re continuing to have conversations. I’m not going back at all in what the state has told Amazon. I’d like to work out something where we took this issue off the table, and Amazon says, ‘Great, we can live with that,’ the state of Tennessee says, ‘Great, we can live with that, too,’ and we have a great relationship.”

Haslam said he did not believe the recent announcement of the distribution center in Lebanon changed the dynamics of the negotiations with Amazon, and he noted that the company has talked of even more distribution centers in the state. Haslam also pointed out that individuals who buy an item online are supposed to pay the tax regardless of the business’s status. is an independent, nonprofit news organization supported by generous donors like you!

Press Releases

TN Department of Revenue Restructured

State of Tennessee Press Release, Oct. 25, 2010:

Department Veterans Elevated to New Positions

NASHVILLE Commissioner Charles Trost has restructured the Tennessee Department of Revenue to ensure that tax enforcement policies are uniformly and consistently implemented. As part of the reorganization, department veterans Arnold Clapp and David Gerregano have been named Assistant Commissioners, responsible for maintaining compliance and uniform tax policies, and upholding the standards and credibility of the department.

“It is imperative that the department provide a reliable structure for compliance,” said Commissioner Trost. “We will continue to provide consistent enforcement to sustain the high degree of integrity in this office. I am pleased to make these appointments to such distinguished attorneys who combine more than 56 years of working in the Department of Revenue, and who will bring the benefit of their experience and judgment to these important new positions.

In his new role as Assistant Commissioner for Compliance and Integrity, Clapp will directly advise the commissioner and the department, and handle legal matters involving tax enforcement. Clapp, a Nashville School of Law graduate, has filled many roles since joining the department in 1967, including Audit Supervisor, Senior Tax Counsel and Special Counsel to the Commissioner.

David Gerregano, a Vanderbilt Law graduate, has been with the department for over 13 years. As Assistant Commissioner for Legal Affairs, Gerregano will provide guidance to the department in its tax policy efforts while continuing to serve in the role of General Counsel.

“The Department of Revenue will now have senior officers responsible for compliance in a manner now standard within major corporations and public agencies,” Added Commissioner Trost. “These positions will have complete authority to oversee all matters within the department and advocate for the taxpayers of the State of Tennessee so that it can provide, to the fullest extent, the myriad of necessary services on which our citizens depend.”

The Department of Revenue is responsible for the administration of state tax laws and motor vehicle title and registration laws established by the legislature and the collection of taxes and fees associated with those laws. The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2009-2010 fiscal year, the department collected $10.1 billion in state taxes and fees. In addition to collecting state taxes, $1.9 billion of local sales tax was collected by the department for local governments during the 2009-2010 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to

Press Releases

Trost Named New Revenue Dept. Head

Press Release from the Office of Tennessee Gov. Phil Bredesen, Sept. 20, 2010:

NASHVILLE – Governor Phil Bredesen today named Charles A. Trost commissioner of the Department of Revenue. Trost replaces former commissioner Reagan Farr who left the administration September 1 to return to the private sector.

“Charlie Trost is widely recognized for his work and expertise in the areas of state and federal tax law and tax litigation and he also brings to this role extensive experience working with industries and companies moving to or relocating in Tennessee,” said Bredesen. “I appreciate his willingness to step in at this time to provide continued leadership to the Department of Revenue and ensure our efforts to create new jobs and attract capital investment to Tennessee are uninterrupted.”

“I am certainly honored to have the opportunity to serve Governor Bredesen and the state of Tennessee in this important role,” said Trost. “Beyond its responsibilities of collecting taxes and enforcing revenue laws fairly and impartially, the Department of Revenue is a critical partner in attracting jobs and investment to Tennessee, and I look forward to working with the employees of the Department of Revenue to fulfill these responsibilities.”

Tennessee has been applauded for the collaboration between its Departments of Revenue and Economic and Community Development to recruit jobs to the state. Since January 2003, Tennessee has attracted more than 190,000 new jobs and attracted $33 billion in new capital, consistently placing among the top five states in the U.S. for business climate.

Trost was previously of counsel with Waller Lansden Dortch & Davis, LLP in Nashville. He has been recognized for more than 10 years for his work in the area of state tax law in The Best Lawyers in America, as well as Business Tennessee’s list of the “Top 101 Lawyers in Tennessee.”

He received his Juris Doctor from the University of Alabama, his Master of Law in Taxation from New York University and holds a Bachelor of Arts from Vanderbilt University. He is a member of the Uniform Law Commission and a Fellow of the American College of Tax Counsel.

Trost is a Trustee of the Community Foundation of Middle Tennessee and a member of the Board of Directors of The Land Trust for Tennessee.

The Tennessee Department of Revenue is responsible for administration of state tax laws and motor vehicle title and registration laws established by the General Assembly and for collection of taxes and fees associated with those laws. The department collects approximately 92 percent of total state tax revenue. It is also responsible for apportioning revenue collections for distribution to various state funds and local units of government. The magnitude of collections by the department makes possible a lower cost of collection per tax dollar than local communities could achieve.