Online retailing giant Amazon.com will start collecting state sales taxes January 1st and state officials expect a giant boost in revenue as a result.
A US Supreme Court ruling says that states can’t require out-of-state vendors to collect sales taxes unless they have an actual physical presence in a state, but negotiations with Amazon led to the construction of two fulfillment centers in Chattanooga and Charleston, Tennessee. Those centers fit the description of a physical presence in the state and a new tax law was passed in 2012.
There are now an additional three fulfillment centers in Tennessee: two in Lebanon and one in Murfreesboro.
Tennessee officials expect a multi-million-dollar rise in tax revenues for the state. The new law requires that for each item sold, Amazon must collect Tennessee's 7% state sales tax plus the local option sales tax (an average of 2.5%).
Analysts for the legislature estimate that the state could net more than $17 million in those taxes, plus an additional $7 million for city and county governments across the state.
Tennessee's sales tax amounts to 54% of all tax revenue for the state.
