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Amazon to open distribution centers in Va., Tenn.

Thursday - 12/22/2011, 11:53am  ET

By MICHAEL FELBERBAUM
AP Business Writer

RICHMOND, Va. - Amazon.com Inc. plans invest about $270 million to open multiple distribution centers in Virginia and Tennessee, altogether creating about 2,650 jobs, state officials and the online retailer said Thursday.

The new fulfillment centers, expected to be completed next fall, are part of the Seattle-based company's plan to support its growth and ensure that it can keep up as it sells more of everything from stuffed animals to power tools. In October, Amazon said it was building 17 new fulfillment centers, adding to the 52 it had at the end of last year.

In Virginia, Gov. Bob McDonnell said the company will invest $135 million for two Virginia facilities in Chesterfield and Dinwiddie counties that will employ 1,350 people. Amazon said it plans to open two new distribution centers in Tennessee, creating more than 1,300 jobs and $135 million in investments. That's in addition to two existing facilities in Tennessee.

Thursday's announcement follows an agreement between Amazon and Tennessee over the collection of sales taxes in which the company would start collecting Tennessee sales taxes in 2014.

Amazon has been at odds with several states over Internet sales tax collection as cash-strapped state governments grapple with how to capture the sales tax revenues that go uncollected from online purchases. In some cases, the online retailer severed ties with affiliates in states that are attempting to collect sales tax.

That's not the case in Virginia, where tax laws won't currently require Amazon to pay sales taxes to the state because the facilities are being built and operated by a separate distribution company, not the actual retail business, state officials said. However, there's federal legislation pending that would require large online retailers to collect sales taxes for them regardless of where those retailers are headquartered. Internet retailers currently must collect sales tax only for those states they have a presence in, such as a store or an office.

"This was solely about jobs and economic development here. Those (talks about online sales tax) are discussions for another time," said McDonnell, who heralded the news as Virginia's largest job announcement since 2004.

"People are so busy that having an online venue where you can shop 24/7 at your kitchen table, like my wife literally did last night, that's the trend in America. Amazon does it better than anyone else, and now they're a major corporate citizen in Virginia."

McDonnell, who approved $3.5 million in grants from the Governor's Opportunity Fund for the Virginia facilities, said the projects will help employ more people in the state, where the seasonally adjusted unemployment rate fell for the second straight month in November to 6.2 percent.

Virginia's jobless rate, which is still below the national average of 8.6 percent, had been decreasing since peaking at 7.2 percent from December 2009 to February 2010, but had risen slightly from July through September this year.

In addition to McDonnell's grants, another $850,000 is being provided by the Virginia Tobacco Indemnification and Community Revitalization Commission. The company also is eligible to receive benefits from the Virginia Enterprise Zone Program, administered by the Virginia Department of Housing and Community Development. The Virginia Department of Business Assistance also will provide funding and services to support the company's recruitment and training activities.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.


(Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)