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Business and Economy Tax and Budget Transparency and Elections

Amazon Announces Tennessee ‘Fulfillment Center’ 3.0

Upping the stakes and adding drama to the Amazon.com tax-collection dilemma in Tennessee, the company announced plans Thursday for a 500,000-square-foot distribution center in Lebanon.

The company said the facility will create hundreds of full-time jobs and that it plans to open the site this fall.

There was no immediate announcement on whether Amazon would have the same arrangement with the state on sales tax collections with the addition of the Lebanon site as the company currently enjoys with sites in Hamilton and Bradley counties.

Amazon does not have to collect taxes on sales in the state, which has been an ongoing issue in the Legislature. Some prominent GOP lawmakers favor requiring the company to collect the tax. Several states face a similar quandary in dealing with the online sales giant.

The trade-off, begun with the administration of former Gov. Phil Bredesen, has been the number of jobs Amazon brings to the state at a time Tennessee is desperate for employment.

Gov. Bill Haslam has publicly backed the arrangements of the previous administration with Amazon, and he has said he believes Congress ultimately will have to settle the tax issue for states. Haslam told reporters Thursday his administration is interested in “jobs, period” and that Amazon had been working on the Lebanon site “for some time.” Amazon released a formal announcement about the site Thursday afternoon.

When asked Thursday afternoon for comment about Amazon, Yvette Martinez, a spokeswoman for the governor, replied by e-mail, “Hundreds of jobs for Middle Tennessee is great news.”

Rep. Linda Elam, R-Mt. Juliet, said the deal was a “wonderful” coup for Lebanon, but she said she did not know specifics about the sales tax arrangement.

“I would imagine it’s all under the same framework they agreed to previously,” Elam said. “I wasn’t involved in those talks.

“There are two ways to look at that. Are they all covered under the same deal, or do they have to be treated as they would have absent that agreement with the prior governor? On the other hand, you look at it and say because of that agreement with the prior governor they’re bringing thousands of jobs to three locations in Tennessee.”

Rep. Charles Sargent, R-Franklin, chairman of the House Finance Ways and Means Committee, the House sponsor of the legislation calling for Amazon to collect from customers, said Thursday he had been unaware that the announcement about Lebanon was coming.

“I’m glad to see companies want to locate here in Tennessee,” Sargent said. “I think it’s a great opportunity for people in Tennessee, anywhere in the state.”

When asked if he still planned to pursue efforts to force the company to collect the sales tax, Sargent reiterated his previous position.

“I’m going to get with the governor, Speaker (Beth) Harwell, Leader (Gerald) McCormick and see how they want to proceed on the bill, if they want to proceed, and where we’re going to head on that,” Sargent said.

“I don’t know what the incentive was to bring them to Wilson County, nor do I know what contract was signed on getting them there.”

Sargent said he knew Amazon was looking at one or two more locations in Tennessee, which has been broadly discussed for several weeks, but that he had not spoken with the governor or with legislators representing the Lebanon area on the issue.

State Attorney General Robert Cooper has issued an opinion that distribution centers like those in Amazon’s plans create nexus, meaning they represent enough physical presence in the state to warrant legislation forcing a company to collect the tax. Cooper’s opinion said the legislation by Sargent and Sen. Randy McNally, R-Oak Ridge, would be constitutionally defensible.

McNally, reached Thursday night, said it’s hard to comment on the specifics of the deal on the Lebanon site when Tennesseans still don’t know exactly what the original agreement was.

“Unfortunately, I nor the people of Tennessee know what the ‘deal’ is,” McNally said. “I guess it would depend on how it was written.

“It could be written that it just applies to the facilities in Bradley and Hamilton county, or it could be written generally that they would not consider the distribution center nexus, and that brings up some issues.”

McNally voiced concern about the erosion of the sales tax base and the issue of secrecy on the original deal.

“I think everybody’s glad to see the jobs come to Tennessee, but I think we need to certainly answer the questions about what the deal is and the fairness of the deal,” McNally said. “And are we treating one business one way and treating businesses that are in a similar situation differently?”

Paul Misener, vice president for Amazon Global Public Policy, who appeared before Tennessee legislators this year, referred to Haslam and legislators in an official press release from Amazon on Thursday.

“We’re grateful to Governor Haslam, Senator Beavers, Representative Elam, Mayor Craighhead, Mayor Hutto and other officials who have demonstrated their commitment to Amazon jobs and investment,” Misener said.

Those other officials are Sen. Mae Beavers, R-Mt. Juliet, Lebanon Mayor Philip Craighead and Wilson County Mayor Randall Hutto.

An attempt to reach Beavers on the announcement Thursday was unsuccessful, but during the legislative session this year, Beavers expressed concern about the tax policy on Amazon.

“I think we’ve got to be very cautious on giving all of these tax breaks to companies because ultimately the taxpayers in Tennessee end up paying for it,” Beavers said in May. “I’m not sure how many jobs we’re talking about, and that would have an impact on some things I think. We just keep giving company after company tax breaks. How long can we afford to do that?”

Craighead, the Lebanon mayor, expressed his gratitude to state officials for their role in landing the Amazon site and gave special credit to the Joint Economic Community Development Board of Wilson County and its executive director, G.C. Hixson, for work on the plan.

“They don’t get a lot of the credit, but they do 95 percent of the work,” Craighead said of the board.

Craighead said he was unaware of any of the terms discussed on sales tax collections.