Tennessee Introduces Internet Sales Tax Provision

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Legislators in Tennessee recently introduced e-fairness legislation modeled on New York State's Internet Sales Tax provision. Tennessee joins California, Connecticut, Hawaii, and Minnesota in introducing legislation that would require out-of-state companies that have affiliates in their states to collect and remit tax on sales made to in-state residents over the Internet. Also, lawmakers in Florida recently introduced a bill to bring the state into compliance with the Streamlined Sale and Use Tax agreement. (See related story.)

This week, the American Booksellers Association e-mailed booksellers in Tennessee to urge them to contact their state lawmakers in support of the Internet sales tax bills currently under consideration in both the State Senate and House of Representatives. The legislation is modeled on New York State's Internet Sales Tax provision signed into law in April 2008 and reaffirmed in January when a New York State judge dismissed a legal challenge made by Amazon.com.

"The number of states now recognizing the importance of locally owned retailers to a state's economy is growing, and we expect this trend to continue," said ABA COO Oren Teicher. "We are asking all of our bookstore members in each of the five states with new bills to urge their legislators to support those bills. As we've noted many times, booksellers can effect change. The hard-fought victory by retailers in New York State clearly opened the door for e-fairness in these five states. And, considering a New York Supreme Court judge recently threw out Amazon.com's challenge to the law, we expect to see this trend continue."

In addition to the booksellers in these five states, ABA is urging booksellers in the other states that collect sales tax to call on their lawmakers to introduce legislation in support of e-fairness.

Booksellers can find a template letter to adapt and send to their lawmakers on ABA's Sales Tax Initiative page. Booksellers are also asked to notify both their regional association and ABA's David Grogan when they have sent their letters. This will help both the regional associations and ABA compile information to support their lobbying efforts.

If passed, under Senate Bill 1741 and House Bill 1947, effective July 1, 2009, a person making taxable sales of tangible personal property or services is presumed to be soliciting business through an independent contractor if the person enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, refers potential customers to the person. This provision only applies if the cumulative gross receipts from sales by the person to customers in the state who are referred to the person with this type of an agreement is in excess of $2,000 during the preceding four quarterly periods ending on the last day of February, May, August, and November.

Senate Bill 1741 was introduced by State Sen. Beverly Marrero (D-Memphis), while its counterpart, House Bill 1947, was introduced by Rep. Johnny Shaw (D-Bolivar). --Dave Grogan