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(Nashville, TN) As of January 1, 2014 Tennessee residents will begin paying tax on Amazon purchases.

Under an agreement with then Governor Phil Bredesen, Amazon was allowed to not collect tax, instead residents have been responsible for paying the tax on their own.

That was something many physical businesses in the state thought was unfair.

“The average business, brick and mortar business has been at a disadvantage because they actually have to add the sales tax in,” said Erica Thomas with Tennesseans for Fair Taxation.

The new agreement, reached under Governor Haslam, puts the responsibility to collect on Amazon.

The state estimates revenues at more than $17 million a year and $7 million for local governments.

“Surrounding e-commerce, it’s something around $456 million that we are losing out because people are not, while they are required by law to actually make that payment. They may receive a notice that you purchased a product that is subject to the sales tax, but it’s really dependent upon the consumer to make that payment,” said Thomas.

Amazon has built two distribution centers in Tennessee.

Tennessee law requires companies with a physical presence in the state, such as a distribution center, to collect sales tax on items shipped to people within the state.