Walmart Adds Clout to Amazon Sales-Tax Battle

Tennessee retailers, led by Walmart, are putting a full court press on the state Legislature to prevent a sales tax exemption for Amazon. The online retailer is building distribution centers near Chattanooga, and with a physical presence in the state it is possible for the state to require the company to collect and remit sales tax on any items bought by Tennessee residents.

But initially, state government—eyeing 1,200 jobs at the centers—has said Amazon doesn't have to collect sales tax.

Tennessee retailers have to collect sales tax and turn it over to the state and small businesses in Tennessee selling online are supposed to collect sales tax and do likewise.

The retailers have hired a pack of lobbyists to argue that they provide thousands of jobs across the state and are being put at a disadvantage by Amazon. Amazon has been playing hardball with state governments, recently announcing it would pull distribution centers out of Texas because the state is insisting they collect sales tax. Amazon does collect sales tax in New York, but is challenging it in court. It has severed ties with thousands of affiliates in several states because of requirements that they collect sales tax. Affiliates are bloggers and websites that direct traffic to Amazon for purchases. Amazon currently collects sales tax in a half dozen states, including Washington state, where its headquarters is located.