<P> On February 1, 2017, Amazon agreed to being collecting sales tax in South Dakota . This followed legislation passed in 2016 requiring retailers to remit sales tax even if they did not have a physical presence in the state . </P> <P> Amazon attempted to avoid being required to collect Tennessee sales tax during negotiations with economic development officials to build two warehouses outside of Chattanooga . Amazon argues that its warehouses are not directly affiliated with the company and thus do not create a nexus that would require the collection of sales taxes . Tennessee revenue officials will not reveal any specific information on a deal with Amazon as they claim doing so would violate state confidentiality laws . </P> <P> A legal opinion by the state attorney general affirmed the constitutionality of a proposed bill in the state legislature that would require Amazon to collect sales tax on goods it ships to Tennessee residents . The opinion also stated that Amazon's construction of distribution centers in the state constitutes a physical nexus . </P> <P> According to study done by the University of Tennessee's Center for Business and Economic Research, the Tennessee state government and local governments will lose about $410 million in tax revenue in 2011 due to online sales . </P>

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