Gov. Bill Haslam announced Thursday he reached a deal with Amazon.com for the online retailer to begin collecting Tennessee sales tax in 2014 and add 2,000 full-time jobs at new distribution centers.
Amazon said it will invest $350 million in Tennessee. The site of two new distribution centers has yet to be decided.
"This agreement balances several needs - the needs of the company and the needs of the state - by providing certainty to Amazon and brick and mortar retailers," Haslam said in a written statement.
Amazon.com Inc. was granted an indefinite waiver on collecting state sales taxes as part of a deal that led to the company's first distribution centers in Tennessee. Amazon had previously agreed to employ at least 1,200 workers full time and potentially thousands more part time or seasonally at Tennessee facilities in Cleveland, Chattanooga and Lebanon.
The tax arrangement was struck by then-Gov. Phil Bredesen, a Democrat, and was OK'd by Haslam, a Republican, before he was sworn into office in January.
Retailers with Tennessee stores that must collect sales tax quickly opposed the deal, saying it gives Amazon an unfair advantage. Lawmakers raised concerns about eroding Tennessee's revenue base, which depends heavily on sales taxes.
Haslam had walked a political tightrope on the Amazon deal by both claiming to honor Tennessee's economic development commitments while also trying to revise the arrangement. A Republican bill that would have forced Amazon to collect sales taxes was delayed after the governor said it would be "disingenuous" to renege on the deal.
Pressure to come to better terms increased after Amazon agreed to begin collecting state sales taxes in South Carolina and California in the coming years.
Seattle-based Amazon has been spending heavily on expansion. When it reported earnings on July 26, the company had announced plans to build 15 new order-filling centers and said it expected to expand further.
Amazon previously announced distribution centers in Cleveland, Chattanooga and Lebanon. That agreement had provided Seattle-based Amazon an indefinite waiver on collecting state sales tax.
Pressure on the Haslam administration to come to better terms increased after Amazon agreed to begin collecting state sales taxes in South Carolina and California in the coming years.