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EcommerceBytes-NewsFlash, Number 2647 - October 07, 2011 - ISSN 1539-5065    3 of 6

Amazon Strikes Sales Tax Deal - Should Etailers Be Worried?

By Ina Steiner
October 07, 2011

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The governor of Tennessee reached an agreement with Amazon.com over the sales tax issue. Gov. Bill Haslam announced the deal on Thursday at a press conference and was joined by legislative leadership and Amazon's lobbyist Paul Misener, Vice President of Global Public Policy. The agreement will be presented to the General Assembly as legislation for consideration when members convene in January.


Amazon.com had reached a similar agreement with the state of California, giving the online marketplace breathing room from having to collect sales tax on in-state purchases.

Amazon won't be required to collect Tennessee sales taxes until January 1, 2014 unless a national solution is addressed before that time. And Tennessee gets 3,500 full time Tennessee-based jobs with benefits, thousands of seasonal jobs, and $350 million in capital investment by striking this week's deal - 2,000 more full-time jobs than were originally announced.

Amazon says it supports Federal legislation requiring all online retailers to collect sales tax, but Econsultancy.com writes that could be very bad news for its competitors:

"While a federal law might, in theory, make collecting local sales tax less painful than if there was no federal law in place, it will still represent the creation of new complexity and regulatory red tape for online retailers."

According to the statement released by Gov. Haslam's office:

"Currently, Tennessee law requires that consumers pay use tax to the Tennessee Department of Revenue when making an online purchase from any retailer that does not collect sales tax. After 2013, responsibility for collecting and remitting the Tennessee tax will shift to the company. In the event that the U.S. Congress acts before January 1, 2014, all online retailers will collect sales tax at the time federal legislation is enacted."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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