Court reviews whether the assessment of sales and use taxes against an out-of-state Plaintiff violated the Commerce Clause of the U.S. Constitution

SCHOLASTIC BOOK CLUBS, INC. v. REAGAN FARR, COMMISSIONER OF REVENUE, STATE OF TENNESSEE (Tenn. Ct. App. January 30, 2012)

The trial court determined that the Commissioner of Revenue's assessment of sales and use taxes against out-of-state Plaintiff for sales to customers in Tennessee was not permitted under the Commerce Clause of the United States Constitution, and entered judgment in favor of Plaintiff. The Commissioner of Revenue appeals. We reverse and remand.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/scholastic_013012.pdf

Amazon to begin collecting Tennessee sales tax in 2014

Amazon to begin collecting Tennessee sales tax in 2014
October 6, 2011
Brian Reisinger (Staff Reporter - Nashville Business Journal)

Gov. Bill Haslam confirmed a sales tax deal with online retailer Amazon.com Thursday morning, announcing thousands of additional jobs and what he hopes will be the resolution of a long-running dispute within the business community.

Amazon will invest a total of $350 million and create 3,500 full-time jobs under the deal, which will also include new locations in Tennessee. Amazon had previously committed to 1,500 jobs in Hamilton and Bradley counties, and between 300 and 500 jobs in Wilson County. The company also anticipates thousands of additional seasonal jobs.

See the full article at the Nashville Business Journal web site: http://www.bizjournals.com/nashville/news/2011/10/06/haslam-seals-amazon-deal-in-tennessee.html

Attorney General Opinion: Out-of-State Dealer's Nexus as a Result of Activities of In-State Distribution Center

In this opinion, the Attorney General discussed whether an out-of-state dealer that maintains an in-state distribution center or warehouse is required to collect Tennessee sales tax from Tennessee consumers. The AG concluded that, "if a retailer directly maintains or owns an in-state distributing house or warehouse, then the retailer has a physical presence within the State of Tennessee and, thus, has nexus with Tennessee for Commerce Clause purposes. On the other hand, if the in-state distributing house or warehouse is owned by a retailer’s subsidiary, instead of the retailer directly, nexus is established only if the subsidiary’s in-state activities are significantly associated with the retailer’s ability to establish and maintain a market in Tennessee for its sales."

The Attorney General also concluded that the fact that the dealer accepts purchase orders through electronic means does not release it of liability from collecting sales tax. Finally, he states that although the "State of Tennessee cannot contractually waive a taxpayer’s obligation to pay sales taxes where the Retailers’ Sales Tax Act unambiguously establishes an obligation to pay such taxes," the Commissioner of Revenue may exercise discretion in determining the best methods of enforcing Tennessee's tax laws.

Read the full opinion here: http://www.tba2.org/tba_files/AG/2011/ag_11_71.pdf

Attorney General reviews whether the Retailers' Sales Tax imposes an unconstitutional tax on imports and exports

In this opinion, the Attorney General reviews the Retailers' Sales Tax Act in order to determine whether it violates the Import-Export Clause of the U.S. Constitution. After analyzing Commerce Clause jurisprudence, he determines that the "imposition of Tennessee;s sales and use taxes on out-of-state businesses with respect to items delivered or used in Tennessee is thus constitutionally permissible, provided that “substantial nexus” is established."

He concludes that the Retailers' Sales Tax Act imposes a privilege tax on the retail sale and use of tangible personal property in Tennessee, but that it does not impose a tax on imports from and exports to foreign countries in violation of the United States Constitution.

Read the full opinion here:
http://www.tba2.org/tba_files/AG/2011/ag_11_67.pdf

Attorney General: Amazon can be pushed on taxes

TN Attorney General Issues Opinion Upholding a Bill that would Require Amazon to Pay State Sales Taxes (Nashville Business Journal)

Tennessee's Attorney General issued an opinion upholding the constitutionality of a proposed bill that would require Amazon to pay state sales taxes. The opinion supports the argument that the building of distribution centers in Tennessee creates a physical presence, or “nexus,” which can trigger sales-tax requirements; however, the Attorney General declined to explicitly state that Amazon, which is building several distribution centers in Tennessee, has a sales-tax obligation to the state.

You can read the full text of the opinion here:
http://www.tba2.org/tba_files/AG/2011/ag_11_52.pdf