We're catching up a bit to this note but thought it was interesting to pass along. Remember two years ago when we were all talking about Amazon's is-it-or-isn't-it nexus and rifling through the fine points of Quill v. North Dakota? The tax team at Baker Donelson Bearman Caldwell & Berkowitz says Department of Revenue officials could be moving to clear up some of the confusion: Part of a recent Court of Appeals ruling cites a New Jersey case that links the licensing of intellectual property to the creation of a nexus.
Amazon.com's vice president of global public policy today addressed a House Judiciary Committee in Washington looking into a federal online sales tax. There, Paul Misener told lawmakers the retail giant wants a solution that lets states collect unpaid taxes but doesn't exempt too many sellers.
The facts in the Quill decision arose a quarter of a century ago, and the Supreme Court’s decision was rendered a year before the World Wide Web was invented. With today’s computing and communications technology, widespread collection no longer would be an unconstitutional burden on interstate commerce, and Congress feasibly can authorize the states to require all but the very smallest volume sellers to collect.
There's nothing really new here, but a close read will give tax attorneys an opportunity to debate. The Tennessee Attorney General's Office has responded to lawmakers' questions about whether Amazon's Tennessee operations and plans will allow it to be exempted from collecting sales taxes.
From the AG's opinion:
"The Commissioner's exercise of discretion is particularly appropriate when the enforcement of a tax may be debatable and must be balanced and coordinated with the Commissioner's other duties and priorities in administering all of the taxes entrusted to him. The Commissioner may also take into account the likelihood and expense of litigation his actions are likely to provoke, particularly given that Tennessee law allows potentially significant awards of attorneys fees and expenses against the non-prevailing party in tax litigation, as well as the broader precedential ramifications of a decision being rendered that is adverse to the state."
Here's a reaction from a coalition of the state's brick-and-mortar retailers.
House Majority Leader Gerald McCormick tells Jeff Woods state officials are back talking to Amazon about a deal that would have the retail giant pay sales taxes — "at some point." Amazon last week leased 500,000 square feet in Wilson County.
Following up on its hint/promise a few months ago to open Tennessee distribution centers beyond the Chattanooga area, Amazon on Thursday afternoon said it has leased 500,000 square feet of space in Lebanon. The company said it's hiring hundreds — based on its previously stated plans in East Tennessee, the number here would be about 400 — and made sure to thank the elected officials who have stuck to the tax breaks it was given by ex-Gov. Phil Bredesen. Nevin Batiwalla reports on CRE chatter that the retailing giant is looking for land to build a shipping hub of 1 million square feet.
Paul Kedrosky passes on the letter Amazon.com has shipped to participants in its Amazon Associates program in California, where lawmakers have passed a bill calling for in-state online sales to be taxed. Attorney General Bob Cooper earlier this week said Tennessee legislators have the constitutional authority to make the same move next year.
From Amazon's California letter:
We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.
SEE ALSO: More on the AG's recent ruling from the Times Free Press
Gov. Bill Haslam says there's no point in talking to Amazon about its purported expansion plans until the sales tax exemption it is asking for is hashed out. A bill to that end is due to be heard in several committees on Capitol Hill today.
“I literally haven’t had that conversation with them, and don’t feel like that’s the right conversation to have with them now. Let’s let this legislation get solved one way or the other, then we’ll have that conversation with them.”
Gov. Bill Haslam says it's too soon to discuss whehter he'd expand a deal to allow Amazon.com to avoid collecting Tennessee sales tax if the online retailer makes good on hints that it will double its investment in Tennessee. WPLN has the story, with this quote:
“We really need to sit down and talk with Amazon and see – what are they talking about? How many jobs? – Investment and the overall impact to the state before we do anything about that.”
For background on the issue, click here.
Amazon.com has told state officials it will build up to three more distribution centers in Tennessee, a plan that would include at least one Nashville facility, if it gets its sought after exemption from collecting sales taxes. Andy Sher has the story, which took its latest twist after South Carolina lawmakers voted down a sales-tax exemption.
House Majority Leader Gerald McCormick, R-Chattanooga, an Amazon supporter, said the company’s willingness to locate more centers in Tennessee “might blunt” criticisms.
“I think people in the Legislature will be happy to see more jobs coming to Tennessee,” McCormick said.