Press round-up on Marketplace Equity Act

October 15, 2011
Press round-up

Press round-up: News on the Marketplace Equity Act

Here’s a round-up of the press coverage on the Marketplace Equity Act, introduced yesterday:

- from Politico, “Online sales tax bill splits community”

- from the National Journal, “House online sales tax bill draws bipartisan support”

- from Internet Retailer, “A new take on web sales tax collection”

- from the Tax Foundation’s Tax Policy blog, “New state online sales tax bill introduced in Congress”

- from Bookselling This Week, “New federal sales tax fairness legislation introduced”

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Marketplace Equity Act (HR 3179) introduced in House of Representatives

October 14, 2011

HR 3179 introduced in House of Representatives

Today Rep. Steve Womack (R-AR) and Rep. Jackie Speier (D-CA) introduced before Congress the Marketplace Equity Act (HR 3179), a bill that, like the Main Street Fairness Act, authorizes state to require all online retailers, regardless of location, to collect state sales tax.

The introduction of the Marketplace Equity Act is a sign that more and more legislators are becoming aware of the problems inherent in the fact that while bricks-and-mortar retailers have to collect sales tax, online retailers do not. We’re happy to see that Washington DC legislators are listening to state and local legislators—not to mention their constituents—and are working hard to offer possible solutions.

Although the Marketplace Equity Act differs in some details from the Main Street Fairness Act, the two bills have the same goal: to ensure that states can enforce existing sales tax laws in cyberspace by requiring online retailers to collect sales tax. The very fact that two bills with this goal exist emphatically demonstrates how much they are needed.

Communities need sales tax revenue to pay for schools, police, and libraries, and local businesses are at a disadvantage when they try to compete with online retailers that don’t have to collect sales tax. By allowing states to require online retailers to collect sales tax, the Marketplace Equity Act and the Main Street Fairness Act stand to return to states over $23 billion in uncollected sales tax. They will also create a level playing field for local retailers, which create three times as many jobs as online retailers.

We welcome Reps. Womack and Speier and their cosponsors to the fight to ensure that all retailers play by the same rules, and we look forward to working with them.

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Reuters: State and local leaders on both sides of the aisle ask Congress to close online sales tax loophole

October 4, 2011
Reuters: Strapped states crave bigger online tax bite

Reuters: Strapped states crave bigger online tax bite

We were fascinated by a new Reuters article that focuses on states’ loss of revenue due to uncollected online sales tax.

Among the facts that caught our eye was this tidbit:

On the state level . . . financial pressures seem to have erased partisan division on the issue. Texas’ majority Republican legislature passed its legislation, and California’s measure had support from both parties.

Hoping to bring that cooperation and a sense of urgency on the issue to Washington, local businesspeople, mayors and other officials from states have been lobbying on Capitol Hill. (emphasis added)

We’ve always believed that online sales tax collection is a bipartisan issue—it’s not about creating a new tax or raising taxes; it’s simply about closing a loophole that’s draining states’ abilities to fund critical local services. We’re glad to see that state politicians are willing to forget about partisanship in order to serve the greater good, and we think that even on the federal level, there’s more agreement than not on the issue. Over time, we believe that more and more political leaders on both sides of the aisle will speak out for the Main Street Fairness Act—particularly since the article quotes a spokesman for the Alliance for Main Street Fairness as saying that “between 150 and 200 members of Congress come from states which have recently taken action and would see hometown support for a federal solution.”

The article also includes a quote from Oklahoma City Mayor Mick Cornett, who’s “lobbied extensively for federal action” (and who is, we note, a Republican), that offers some specific figures on what the lost sales tax revenue would have paid for:

Cornett says the $10 to $15 million a year his city loses on uncollected taxes equates to between 100 and 150 firefighters or police. He says he’s making progress arguing that these are taxes already owed, not new taxes.

“Now you find conservatives in Washington who understand this is closing a loophole, it’s not a new tax,” says Cornett.

“Most cities are just hanging on, trying to keep the firefighters and police on the street. This is one way Congress can help local governments without it costing them anything.” (emphasis added)

Granted, that figure applies only to Oklahoma City, but it does give us some idea of just what we lose when online retailers don’t collect sales tax. Consider, too, that the 100 to 150 firefighters or police officers that sales tax would have paid for isn’t only a loss to the community, as important as that is. It’s also a loss of new jobs at a time when they are desperately needed. If Oklahoma City had had the $10 to $15 million a year that it’s due in uncollected sales tax, it could have created 100 to 150 new jobs.

The article concludes with a discussion of how sales tax contributes to state budgets:

Nationally, the cost of running local government is rising faster than tax revenue. Sinking property values are hurting real estate tax collections. Stagnant salaries have kept income tax flat in the states which impose one.

Oklahoma’s cities rely on sales taxes for 55 percent of their budget on average. In some places, sales tax covers more than 90 percent of the local budget.

Arkansas municipalities rely on it heavily too, for close to 50 percent of their income from sales taxes. Slack receipts have driven 15 Arkansas cities to institute sales tax increases so far this year, according to the Arkansas Municipal League.

Texas Comptroller Susan Combs calculates that in fiscal 2010, which ended August 31, her state lost $658 million in uncollected sales taxes. Sales tax contributes 55 percent of the state’s total income. (emphasis added)

These figures are revealing, particularly when you consider the fact that sales tax revenue has been declining for the past decade, due mainly to the increase in online shopping. Add up these three facts—sales tax provides at least 50% (in some places, up to 90%) of city or municipal income in Oklahoma, Arkansas, and Texas; sales tax revenue has been declining for a decade; and in this economy, other sources of revenue, such as income tax and property tax, are also declining—and it becomes clear why 15 Arkansas cities had to raise sales taxes this year. If online retailers were collecting the sales tax that’s already due, those increases would not have occurred.

Near the beginning of the article, Mick Cornett, mayor of Oklahoma City, directs a plea toward Congress: “We need help at the federal level. . . . There’s a limit to what we can do [locally].” If Congress is paying attention to what its counterparts at the state and city level are saying, not to mention to the needs of Americans for new jobs, firefighters, and police, the Main Street Fairness Act should pass soon, by a wide margin.

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Round-up of recent press on online sales tax collection

October 3, 2011
Recent press

Recent press on online sales tax collection

We’ve been looking at the recent editorials and news articles on online sales tax collection, and we’re encouraged to see that most of them are in favor of it—a position that we’ve long argued to be practical, sensible, and simply right.

From the Tulsa World, “Only fair: Online sales tax is necessary”:

No one likes paying taxes. They are, however, necessary to keep a city and state running. You might not like a sales tax, but you certainly like good roads.

If we’re going to have taxes, it is imperative that everyone pays their share. For years, some shoppers have been skirting local and state sales taxes by purchasing items online that are available locally. That is not fair to those who support local businesses and keep their cities running with local sales taxes. . . .

States and cities . . . need the income that they have coming. Local merchants, who choose to do business here and employ Tulsans and spend their hard-earned money with fellow local merchants and pay their sales taxes, deserve a level playing field. 

From the Bismarck Tribune, “Main Street Fairness Act: A bill to close the sales tax loophole”:

Studies show that states are losing about $23 billion annually in sales taxes. The tax is legally due on purchases but goes uncollected because the seller is not required to collect the tax and the purchaser fails to report and remit the tax due. This situation creates a huge disparity and an extreme disadvantage for our main street retailers who are competing with retailers selling over the Internet or by some other remote means. . . .

The Main Street Fairness Act addresses the issue of fairness and levels the playing field for all retailers. . . .

Cities, counties and state government rely on sales and use tax revenue to provide services to our residents and to build and maintain a high quality infrastructure for the businesses operating here. The Main Street Fairness Act is an important bill for the retail industry and states—it provides for fairness across the retail industry while permitting individual state sovereignty and supporting a fair sales tax system. . . .

The proposed legislation will go a long way to support and encourage growth in our local North Dakota businesses along with main street retail industry across the country. We encourage Sens. Kent Conrad and John Hoeven and Rep. Rick Berg to sign on to the legislation and support it when it comes up for a vote.

From the Detroit Free Press, “Online sales tax collection rules would level playing field and add funds to state”:

Main Street retailers, the backbone of America, stimulate local economies, build communities and provide good, stable, local jobs. In July retailers added 26,000 jobs to the national economy.

However, these jobs are being threatened by online retailers fighting to preserve an unfair price advantage of 6% over brick-and-mortar stores in Michigan. . . .

In today’s marketplace, the shape of commerce is changing, but the rules remain stuck in 1992—well before the era of the iPad, smart phones and even home Internet access. Online-only retailers are exempt from collecting sales tax at every point of purchase. . . .

Many consumers are often unaware that the tax on online and catalogue purchases already exists. When an online retailer fails to collect the sales tax, it falls to the consumer to report that tax directly to the state, which is often not done.

The Center for Business and Economic Research estimates that this year Michigan will lose more than $125 million in revenue due to the Internet sales tax loophole. As legislators grapple to fill budget gaps, this revenue would go a long way toward adequately funding essential public services: paving roads, keeping police and firefighters on the job, and providing our children with a quality education.

States have been compelled to take action in the absence of a national approach to sales tax collection. But a possible solution is the Main Street Fairness Act, introduced in Congress in July. The bill is designed to grant states the authority to set up a simple and equitable system of tax collection on remote sales and, ultimately, the ability to collect these taxes at the point of purchase. . . .

We need a 21st Century framework to ensure a marketplace that benefits online retailers in addition to brick-and-mortar retailers, who provide good local jobs, support our communities and drive America’s economy.

Our country is overdue for a national solution to the issue of sales tax collection.

From Gazette.net (Maryland), “Inaction on Internet sales tax hurts states”:

For Maryland, collecting sales tax on Internet purchases could yield additional revenue estimated to be in excess of $200 million annually, which the state sorely needs to bring budgets into balance given the lagging condition of our local economy and continued structural deficit.

Without this revenue, which is rightfully owed to the state, programs such as Medicaid, K-12 education and our transportation infrastructure needs will be unmet without additional tax increases. . . .

More importantly, though, such a policy change would level a slanted playing field for bricks and mortar retailers who invest in our local communities and currently charge and collect taxes on sales via the Internet. . . .

Moving forward . . . our federal representatives and Congress as an institution should end this debate and do what’s right for state governments and more importantly for countless mom-and-pop retailers that serve as the backbone of our nation’s economy.

From the Midland (MI) Daily News, “Local businesses like proposed Internet sales tax legislation”:

Legislators hope a newly proposed online sales tax bill will equalize what they consider an unfair playing field between Web retailers and small businesses. . . .

Michigan would save up to $141.5 [million] in lost sales tax revenue if the [state] bill becomes law, improve sales at brick-and-mortar retailers by as much as $126 million and create up to 1,600 jobs, according to a report from the Lansing-based Public Sector Consultants.

Jerry Meier, owner of Meier Camera Shop, 122. W. Main St. in Midland, said he cannot believe the state has chosen to miss out on those tax dollars for so long.  “We’ve wondered about this for some time. I think it’s going to make a difference,” Meier said. “Everyone says ‘buy local,’ but when it gets right down to it, they look at (online retailers) as an advantage.”

A 6 percent disadvantage when it comes to sales taxes makes a large difference in the long run, he said. . . .

“Legislators we’ve talked with understand that a sale is a sale is a sale regardless of where it takes place,” said Tom Scott, senior vice president of the Michigan Retailers Association. “Government should not be picking winners and losers by favoring one type of retailer over another — especially when it’s our hometown Michigan retailers who are being hurt by the current situation.”

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California-Amazon deal gives hope to states and the Main Street Fairness Act

September 30, 2011
Stateline.org

Stateline.org: Amazon deal with California may set precedent for online tax collection

According to an article on Stateline.org, the deal between Amazon and California on online sales tax collection gives other states hope that they, too, may get online retailers to collect sales tax—though they do not have as strong a position for negotiating as California:

Now that the largest state in the country has seemingly pressured Amazon to change its policy, the result could be a flood of new online tax laws, as other states ask why Amazon can’t treat them the same as it treats California. Danny Diaz, spokesman for the Alliance for Main Street Fairness, a group trying to get the online retailers to collect taxes, says Amazon has undermined its own case by striking the California deal. “You begin your argument by saying you can’t do it, it’s too complicated, it’s unconstitutional and all of this,” Diaz says, “and you end your argument by saying you’ll do it in a year, it’s legal, you can do it. Clearly, clearly the ground has shifted underneath your feet.”

Other states, though, might not be in a position to get the same deal as California. For one thing, Amazon had more of a presence in that state than simply a bunch of affiliates. The company had several wholly-owned subsidiaries in California, which made it tougher for the company to claim that it lacked a physical presence.

The other difference is that California is simply bigger, which may have made Amazon leery of cutting its ties there. Last Friday, the company said it would add 10,000 jobs in the state in coming years. “When you’re California or New York across the table from an Amazon, it’s a pretty big slice of the market,” says Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services. “We don’t have the leverage that a New York has or the leverage that a California has.”

But, the article continues, the Amazon-California deal inspires even more hope that federal legislation on online sales tax—which would make state-by-state laws unnecessary— will finally pass:

For now, Amazon isn’t indicating that it will offer other states the same deal it offered California. But the company is saying what it would like to have happen next: a federal solution. “We’re committed to working with Congress, retailers and the states to pass federal legislation as soon as possible,” Paul Misener, Amazon’s vice president of global public policy, said in a statement after Brown signed the law. That isn’t a new position. Amazon’s case has long been that it isn’t against collecting sales taxes, so long as a federal deal also makes collecting the taxes less burdensome.

That’s actually what most state officials want, too. Legislation in Congress known as the Main Street Fairness Act would require online retailers to collect sales taxes in the state where a purchase is made, but only if the state is among those that that have made their sales taxes more uniform through an interstate collaboration known as the Streamlined Sales and Use Tax Agreement.

When state legislators came to Washington last week to give their view on federal debt negotiations, one thing they asked Congress for was passage of the Main Street Fairness Act. With Amazon and big brick-and-mortar retailers like Wal-Mart and Target forming an unusual coalition in favor of a federal law, their hope is that their side has the clout to win passage. If the California deal adds urgency to the efforts, all the better. “We’re going to face hundreds of millions, billions of dollars in [aid] reductions,” says Neal Osten, director of the National Conference of State Legislatures’ Washington office. “This is something Congress can do for the states.”

With Amazon, Walmart, Target, and many more major retailers (not to mention the Retail Industry Leaders Association) all joining state legislators from both sides of the aisle in supporting the Main Street Fairness Act, surely the bill’s time has come.

“Still,” the article says, “there are reasons for skepticism.”

For one thing, some online retailers are still taking a hard line against collecting sales tax. Jonathan Johnson, president of O.co (formerly known as Overstock.com), points out that Amazon’s size and wealth positions it to cope with differing sales tax rates and definitions around the country. Smaller online companies might suffer more. “I think the Main Street Fairness Act is anything but main street and anything but fair,” Johnson said in an interview with Stateline. “Big retailers would like to create a barrier to entry for any new company.”

The other reason for doubt is that Congress has struggled to forge compromises on all big issues lately. A proposal that would result in more taxes being collected—even if the taxes are legally already owed—will be an especially hard sell, even if the failure to pass it will likely result in a new round of messy fights between states and online retailers.

If these are the only arguments standing in the way of the Main Street Fairness Act, then we take heart. There are reasonable answers to these objections.

First, the notion that “the Main Street Fairness Act is harmful for small online retailers”: It’s really not. Technology has reached the point that today, it’s no more difficult to collect sales tax online than to calculate shipping rates. Look at TaxCloud, a comprehensive sales tax management service that’s available at no cost for retailers. With services like TaxCloud available—again, at no cost—there’s no reason for any retailer, no matter how small, to find it difficult, costly, or burdensome to collect sales tax.

Second, there is this scare statement that “the Main Street Fairness Act is a hard sell in Congress”: We disagree. While it is easy to simply say things like “it will never happen” or “Congress is too divided,” nobody in Washington DC is saying that about this issue (except for the ATU and NTP). In fact, it’s one of those rare bills that has bipartisan support. It may have been introduced by a Democrat, but it has lots of Republican supporters, among them Senator Bob Corker (R-TN), Senator John Boozman (R-AR), and Tennessee Governor Bill Haslam (not to mention all the Republican supporter in state legislatures, such as Luke Kenley (IN) and Evelyn Lynn (FL), to name just two). We think that once hard facts overcome all the inflammatory rhetoric about the Main Street Fairness Act, voting for it should be a pretty easy decision.

The Stateline article is well worth reading in its entirety for its thorough summary of the arguments for and against online sales tax collection. Just keep in mind that the arguments against it aren’t the last word.

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Michigan becomes latest state to consider affiliate nexus legislation

September 29, 2011
Michgan State Capitol

MLive: Michigan becomes latest state to consider affiliate nexus legislation

Michigan has become the latest state to consider affiliate nexus legislation, according to this article on MLive.com. Although the state bill (HB 5004) is being referred to by the Michigan media and even several of its sponsors as “the Main Street Fairness Act”, it is completely different from the federal bill of the same name, introduced in July by Senator Dick Durbin.

The state bill would require online retailers with affiliates in Michigan to collect sales tax.

The federal bill, on the other hand, would not affect affiliates at all. It would authorize states that have simplified their sales tax laws—as already Michigan has—to require all online retailers, regardless of location, to collect sales tax.

The reasons for supporting online sales tax collection make a lot of sense:

“We are trying to level the playing field for Michigan retail businesses,” said Barb Stein, owner of Great Northern Trading in downtown Rockford. “We want to make sure that anybody that sells something in Michigan subject to sales tax has to collect it, including Internet retailers.”

Stein was part of the press conference Tuesday unveiling the proposed Michigan Main Street Fairness Act, co-authored by state Reps. Eileen Kowall, R-White Lake Township, and Jim Ananich, D-Flint.

Closing the loophole could save the state $141.5 million in lost sales tax revenue, generate as much as $126 million in additional sales and lead to the creation of 1,600 jobs,according to a report released last week by Lansing-based Public Sector Consultants.

“The uneven playing field reduces economic activity across the state and prevents small businesses in Michigan from adding jobs,” said Sikkema, a senior policy fellow at the nonpartisan think tank and a former Republican House minority leader from Grandville.

But the federal Main Street Fairness Act would have all these benefits without the drawbacks of the recent rash of state-by-state “affiliate nexus” or so-called “Amazon tax” bills. Retailers usually respond to state affiliate nexus bills by dropping their affiliates in the state, which means the in-state affiliates have to either move out of state or face an enormous drop in income. What’s more, these bills have repeatedly proven not to bring an increase in sales tax revenue—they’re simply ineffective.

There’s a terrific editorial in favor of the Michigan bill that laments the fact that state affiliate nexus laws are necessary, that Congress hasn’t yet passed the federal Main Street Fairness Act:

Michigan businesses have struggled enough without politicians adding to their troubles. Yet the burden they’ve faced in recent years has not been relieved by a simple measure Congress could take. Congress could have empowered states to collect taxes on remote sales made to their citizens — sales over the Internet and through catalogues. E-commerce in particular has become an increasingly common way to do business. . . .

Jobs that could have been created in our local communities will not be created, because bricks-and-mortar retailers in Michigan operate at a disadvantage against their virtual rivals. If e-tailers can spare their customers the 6 percent sales tax, main street stores get undercut on price, especially where large purchases are concerned.

With Congress failing to act, members of the state legislature are going to take another run at it this important question. Tuesday, state Reps. Eileen Kowall, R-White Lake Township, and Jim Ananich, D-Flint, introduced the Main Street Fairness Act.

The act would level the playing field between in-state retailers — who pay taxes and employ people in Michigan — and remote retailers who do not. The bills should be passed by lawmakers.

The greatest irony is, Michigan has already done all the work needed and enacted laws necessary to simplify its sales tax laws in accordance with the Streamlined Sales and Use Tax Agreement. The federal Main Street Fairness Act requires states to do this before they can mandate all online retailers to collect sales tax. So Michigan has already made sales tax collection easier for businesses and is poised to benefit from the federal legislation as soon as it is passed by Congress—but the state legislators still feel the need to look at affiliate nexus legislation because right now it’s the state’s only recourse to get at uncollected online sales tax revenue without Congress taking action. Hopefully Congress will soon pass the already pending Main Street Fairness Act, so Michigan is not forced to enact H.B. 5004 and inadvertently hurt its thousands of affiliate marketing businesses.

We understand why Michigan is considering affiliate nexus legislation, but the state would do better to put its full support behind the federal Main Street Fairness Act. It’s better for everyone—states, affiliates, online retailers, and consumers.

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Amazon and retailers agree with California to push for federal legislation resolution (Main Street Fairness Act)

September 8, 2011

As reported moments ago by the Sacramento Bee (read here), Amazon and other national retailers have agreed to suspend their referendum effort in exchange for a concerted effort to resolve this issue (of internet sales tax collection) by July 2012.

We recommend reading the article directly, as the SacBee has this issue well covered.

9/9/2011 UPDATE – California legislature approves amended AB 155, repeals ABX1 28! AMZN to reinstate CA affiliates! All to work to pass the Main Street Fairness Act!

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Senator Bob Corker (R-TN) voices support for online sales tax collection

August 26, 2011

According to an article in the Nashville Business Journal, Senator Bob Corker (R-TN) has voiced support for the online collection of sales tax:

U.S. Sen. Bob Corker signaled Wednesday that he’d support a federal policy to make online retailers collect sales taxes, calling it “patently unfair” that companies like Amazon.com don’t have to while brick-and-mortar businesses do. . . .

Corker on Wednesday stopped short of outright saying he was ready to support a proposal to force the collection of sales tax by online retailers nationally. He said he’s studying a legislative proposal by Sen. Dick Durbin, D-Ill., that is still changing, and Corker noted that consumers already are supposed to contribute sales taxes for online purchases but typically don’t.

In a recent blog post, we talked about the (false) perception that online sales tax collection is a partisan issue—in fact, we’re seeing more Republican politicians speak out in favor of online sales tax collection every day. Which isn’t surprising at all. The online collection of sales tax is a bipartisan issue of tax fairness; it doesn’t involve raising taxes or creating a new tax, and it does involve making sure our Main Street retailers are able to compete with online retailers on a level playing field.

We applaud Senator Corker for speaking out in favor of online sales tax collection, and we look forward to seeing more and more Republican lawmakers join him.

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Editorial: Florida (and the country) needs online sales tax collection

August 26, 2011

We were thrilled to see this editorial from the Tallahassee Democrat (reprinted on the News-Press.com website), which makes one of the strongest, most cogent arguments for online sales tax collection that we’ve ever read. We urge you to read the entire editorial, but here’s part of it:

State Rep. Michelle Rehwinkel Vasilinda reminds – or attempts to remind – her tax-resistant colleagues in the Florida Legislature that collecting a sales tax on purchases made online is not the same as raising taxes.

Raising money, yes, but as Rehwinkel Vasilinda put it at the end of last session, “The concept of leaving tax revenue on the table, especially when we really need it, is really irksome.”

Taxes should be collected on purchases from online merchants, the same as purchases in brick-and-mortar shops, which suffer from this not-so-level playing field of commerce. Business groups such as Associated Industries of Florida and the Florida Retail Federation would like to see the disparity addressed.

It’s not just the tax avoidance that’s a problem for local merchants. In many cases local stores end up functioning as a showroom for online shoppers who like to look at the merchandise in person, but buy it online where there’s no sales tax.

But because online sales cross state boundaries and tax rates vary so much nationwide, a meaningful online sales tax would be most effectively and uniformly collected under federal legislation.

This clear-sighted editorial ends with an endorsement of both the Main Street Fairness Act and the Streamlined Sales and Use Tax Agreement (SSUTA). SSUTA was created by forty-four states and the business community to simplify sales tax collection and make it easier for businesses to collect sales tax. The Main Street Fairness Act would allow states that have adopted SSUTA’s guidelines to require all retailers, whether in-state or out-of-state, to collect sales tax on purchases made by state residents.

Last spring, Rehwinkel Vasilinda, D-Tallahassee, sponsored HB 455 to have Florida join the agreement, and Sen. Evelyn Lynn, R-Daytona Beach, sponsored the companion SB 1548. Neither moved forward, though perhaps now, with this umbrella effort in Congress gathering steam, Florida lawmakers will join the 23 states that have joined the coalition.

Roughly 1,400 retailers already collect sales tax in those “streamlined” states on a voluntary basis.

They’ve remitted more than $700 million to their respective states, yet estimates are that the actual amount lost could be as much as $23 billion by 2012.

This legislation is overdue in Congress, and the collection of this tax is critical to Florida, which needs to join the future and work to close this unfair tax loophole here.

To those who have said that online sales tax collection is not a bipartisan issue: Note that the measure to have Florida join SSUTA was introduced in the Florida Senate by a Republican and in the House by a Democrat.

In an article on another Florida website, Matthew Falconer, who is running for mayor of Orange County (FL), also points out that the Main Street Fairness Act is a bipartisan issue and offers a way to combat the false perception that it increases taxes:

Not surprisingly there is support for the bill on a state level by Republicans and Democrats alike. Even Jeb Bush supports some type of internet sales tax. There are complications to the collection procedures but the technology exists to address those problems. The obstacle to the internet sales tax collection problem is political. It is seen as a tax increase which is taboo for Republicans.

The easy solution to that problem, again supported by Jeb Bush, is to reduce taxes by the same amount of the increased revenue from internet sales tax collection. This does not create additional taxes but levels the playing field between brick and mortar stores, the ones that employee our neighbors, and on line retailers (many of which are based in other countries).

Other politicians have also suggested that if sales tax were collected online, other taxes could be eliminated. As we blogged about recently, Indiana State Senator Luke Kenley and West Virginia delegate John Doyle have said that if online retailers collected sales tax for their states, the inheritance tax or the groceries tax (respectively) could be eliminated.

We have long said that online sales tax collection is a bipartisan issue, one that should matter to anyone who cares about fairness and tax equality. We’re glad to see that politicians on both sides of the aisle agree.

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MA Committee on Revenue endorses bill to join Streamlined

August 19, 2011

According to a State House News Service article in the Boston Herald, Massachusett’s Committee on Revenue last week endorsed a state bill that would allow Massachusetts join the Streamlined Sales and Use Tax Agreement (SSUTA).

Although the article refers to the bill as H 3672, our research shows that H 3672 is a bill on accessible housing for people with disabilities. It’s our guess that this is simply a typo in the article and that the actual bill the Committee on Revenue approved is H 3673, a revision of H 1695 that the committee “reported favorably” on August 15 and that aims to “promote sales tax fairness for Main Street retailers.” H 3673 would “authorize the commissioner to petition the Streamlined Sales Tax Governing Board to allow the commonwealth to become an associate or full member of the Streamlined Sales Tax Governing Board.”

We strongly support the commonwealth’s efforts to simplify and standardize their sales and use tax laws by joining SSUTA—we even went up to Boston in April to testify in support of the bill. Our testimony read, in part:

This bill is very important to alleviate the imbalance being felt by local retailers across the state, as increasingly they are seeing consumers browse their stores and ask clerks questions, only to go home and buy from online retailers to save on sales tax. Over time, the vanishing sales tax revenue has hurt not only the state, which is losing the sales tax proceeds, and local retailers, who are losing business, but even Massachusetts residents themselves, as the loss of sales tax revenue has resulted in dramatic cuts to local services, including police protection, fire protection, and schools.

In addition, by adopting this legislation Massachusetts would send a clear message to Washington, D.C., that it is time for federal action to correct the growing inequity between local retailers that have to collect sales tax and online retailers that do not. It’s time to shift the burden of calculating, reporting, and remitting tax on online purchases from individual consumers to online retailers. It’s time for local communities to start receiving the sales tax revenue they are due, so they can stop cutting services because of lack of funds. It’s time to recognize that collecting sales tax on online purchases is fair, easy, and the right thing to do. It’s time to pass the Main Street Fairness Act.

True, joining SSUTA is just a first step toward resolving the unfair practice of requiring local small businesses to collect sales tax while not requiring the same of larger, and frequently more technologically sophisticated, out-of-state retailers. It’s only a first step, but it’s a crucial step. Momentum on this issue is building, and Massachusetts now has the opportunity to stand united with twenty-four other states and say that the problem of uncollected sales tax, which affects nearly every state in the nation, needs a national solution, and that national solution has been provided by SSUTA.

If Massachusetts does become the latest state to join the Streamlined Sales and Use Tax Agreement, it would simplify Massachusetts’ sales tax regulations, making it easier for businesses (particularly those outside Massachusetts) to collect Massachusetts sales tax.

We applaud the Committee on Revenue for approving this sensible legislation, and we hope to see Joint Committee on Rules show the same wisdom. We look forward to the Bay State  becoming the 25th member of the Streamlined Sales and Use Tax Agreement.

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FedTax Rebuts NetChoice and TechAmerica Misinformation Campaign on Main Street Fairness Act

August 18, 2011
FOR IMMEDIATE RELEASE

FedTax Rebuts NetChoice and TechAmerica Misinformation Campaign on Main Street Fairness Act

New Legislation Will Make Sales Tax Collection Simpler

Seattle, Washington – August 18, 2011 – FedTax has issued a rebuttal to the misinformation and scare tactics being used by NetChoice and TechAmerica in an effort to derail the Main Street Fairness Act, which was introduced on July 29 in the Senate by Senator Dick Durbin (D-IL) and in the House of Representatives by Representative John Conyers (D-MI).

Misinformation
A statement issued on July 29 by NetChoice’s Steve DelBianco inaccurately claims that the cost of collecting sales tax will hurt online retailers and that the Main Street Fairness Act “fails to define safe harbors for small businesses.”

“Both of these claims are simply false,” said Joan Wagnon, FedTax Executive Vice President and former Secretary of Revenue for the state of Kansas. “Free software is available to help retailers comply with the Main Street Fairness Act. And Mr. DelBianco’s statements about nonexistent safe harbors for small business are rubbish.” The Main Street Fairness Act, she explains, incorporates the Streamlined Sales and Use Tax Agreement (SSUTA), which exempts small businesses from collecting sales tax. “Section 609 of SSUTA explicitly defines a small seller exception-any retailer with less than $500,000 a year in remote sales is not obligated to collect sales tax. Furthermore, Section 610 creates a plan to compensate small sellers for any expenses incurred in conforming to SSUTA. Any retailer with less than $5 million a year in remote sales can receive up to $12,240 in reimbursements within the first six months of collection. The states developed the small seller exception and the reimbursement plan specifically to accommodate to the concerns raised by businesses during the public meetings and hearings organized by the SSUTA Governing Board, which Mr. DelBianco attended.”

Scare Tactics
An August 16 letter from TechAmerica incorrectly says that the Main Street Fairness Act “would cede Congressional [sic] power over interstate commerce to the SSUTA Governing Board, a body created by a few states.”

In fact, the Streamlined Sales Tax Project was created by the National Conference of State Legislatures (NCSL), the National Governors Association (NGA), forty-four states, and more than eighty-five businesses. The Governing Board, which is composed entirely of state-appointed representatives, was formed in 2005.

Ms. Wagnon, herself a former president of the Governing Board, explained, “Under the Main Street Fairness Act and SSUTA, states retain complete control of their sales tax systems. All of the states that have voluntarily adopted SSUTA’s guidelines to simplify their sales tax laws have done so with absolute transparency and accountability. And every SSUTA state sends both elected officials and revenue department officials to the Governing Board to express the will and intent of that state’s voters. So in fact, the Main Street Fairness Act protects states’ rights and sovereignty by ensuring they determine their own sales tax rules. The states choose whether or not to adopt SSUTA guidelines, and their representatives make up SSUTA’s governing body.”

TechAmerica insists that keeping track of the nation’s sales tax rates would adversely affect online retailers. But according to David Campbell, FedTax CEO and cofounder, “It’s absurd to say that collecting sales tax would hurt e-commerce companies. The real-time shipping tasks these companies already can do are far more complex than collecting sales tax. For instance, online retailers regularly calculate shipping fees based upon the size and weight of items being purchased, the destination of the purchase, and the desired delivery speed. Calculating, collecting, and remitting sales tax is much easier-especially with services like TaxCloud available at no cost to retailers.”

Simplification Achieved
According to Scott Peterson, executive director of the Streamlined Sales Tax Governing Board, SSUTA’s guidelines are beneficial for businesses. “SSUTA’s provisions have been developed by states and businesses over the past decade to simplify sales tax collection,” he said. “Instead of keeping track of a multitude of state sales tax regulations, for SSUTA member states, retailers only need to follow the guidelines in SSUTA-which means, among other benefits, they’ll only have to use one tax return form for every SSUTA state. And if a business uses a sales tax management service offered by a SSUTA Certified Service Provider, they know the service has been tested and verified by every SSUTA member state.”

Sten Wilson, owner of Point of View Farm, a heritage sheep farm in upstate New York, says that the Main Street Fairness Act will make it easier for businesses to comply with sales tax laws. Wilson and his wife “frequently visit festivals and fairs in other states to sell … livestock, wool, and yarn,” he states. “Upon returning home from each trip, I [used to be] faced with the complex and exhausting task of … filling out all the sales tax return forms.” The Main Street Fairness Act, Wilson says, would change that by providing an incentive for states to simplify and standardize their sales tax laws by adopting SSUTA’s guidelines.

“The combination of . . . technology [like TaxCloud] and SSUTA’s simplification measures ultimately unravels a huge web of entangling forms and paperwork, freeing businesses like mine from bureaucracy, promoting efficiency, and increasing productivity and, most importantly, profitability,” says Wilson. “They make dealing with sales tax much, much easier for small business owners.”

About FedTax
FedTax makes it easy for businesses to calculate, collect, and remit sales tax with its free TaxCloud sales tax management service. It was founded by e-commerce veterans who have extensive experience in large-scale internet services and have been directly involved in building some of the most recognizable brands on the internet, including Google, American Express, Microsoft, and Expedia.

FedTax has been designated a Certified Service Provider by the Streamlined Sales Tax Governing Board. The company’s free TaxCloud service is relied upon by nearly 900 businesses to calculate and remit sales tax across the country. TaxCloud can be easily integrated into most accounting, order management, and e-commerce shopping cart systems.

FedTax is headquartered in Seattle and has offices in Connecticut and Kansas.

FedTax Contact:
Daniela Saunders
SVP Marketing
dsaunders (at ) fedtax.net
+1 203-803-2048

View a PDF of this Press Release

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More business groups supporting the Main Street Fairness Act

August 17, 2011
WFCA

WFCA supports Main Street Fairness

The American Booksellers Association (ABA) and the World Floor Covering Association (WFCA) have joined other business groups in publicly stating their support for the Main Street Fairness Act.

According to an article on the industry website Floor Covering News, the WCFA endorsed the Main Street Fairness Act after a unanimous vote of its executive committee:

“This legislation is long overdue and aptly named,” said Jim Walters, Chairman of the Board, WFCA and president of Macco’s Floor Covering, Green Bay, WI. “In some states Internet sellers enjoy as much as a 10% price advantage over local brick and mortar retailers who are mandated by law to collect and remit sales tax to local and state governments. This legislation would make the playing field a little more level,” he concluded.

The WFCA views the legislation as helping small business interests. “This bill is crafted in such a way that it is not anti-Internet based companies, but does seek to address the fundamental unfairness in the marketplace as Internet commerce takes an ever increasing slice of the retail pie,” said Chris Davis, president & CEO, WFCA. “This is not a Republican or Democrat issue. It impacts all Americans. And it’s not a new tax. It’s one every purchaser is supposed to pay, but isn’t. The WFCA is joining coalitions to support this legislation and we are going to encourage everyone we can to back these bills and write their representatives in Washington to urge them to support their passage.” (emphasis added)

ABA e-fairness campaign

ABA e-fairness campaign

The American Booksellers Association has long been a strong supporter of online sales tax collection. According to an article in Bookselling This Week on the ABA website, Oren Teicher, the ABA CEO, wrote to Senators Susan Collins and Olympia Snowe of Maine to ask them to support the Main Street Fairness Act:

In the letters to Collins and Snowe, Teicher wrote: “This bill if passed would go a long way toward leveling the playing field for bricks-and-mortar stores in those states. More importantly, since customers already owe use tax for any online purchases they make, this is not a new tax — it simply stipulates who is required to collect and remit the sales tax.

“Currently, our independent bookstore members, and Main Street retailers like them, are being forced to compete with remote, online retailers that have a significant, and unfair, advantage. . . .

Teicher also noted: “Importantly, sales tax fairness is an issue that is supported by Republicans and Democrats at both the state and federal level. Sen. Durbin’s bill is virtually identical to the bill introduced by [Republican] Senator Enzi last year, and, ultimately we expect full bipartisan support for the Main Street Fairness Act. We urge you to please support Sen. Durbin’s bill.” (emphasis added)

The ABA website provides an “e-fairness action kit” with templates for letters to lawmakers. Although it’s designed for independent booksellers, the kit is a great resource for anyone who wishes to contact their state or federal representatives.

We’re happy to see these groups join others in supporting the Main Street Fairness Act. It’s important to remember that for every Walmart or Best Buy that supports the bill, there are dozens of small businesses—such as an independent bookstore or rug seller—that also support it. They may be less visible, but there are many more small businesses than large ones that need this legislation in order to compete on a level playing field with online retailers.

If you agree and want to support small, independent businesses in your community, write to your representatives and let them know that you are in favor of the Main Street Fairness Act.

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Sen. Boozman (R-AR) voices support for the Main Street Fairness Act

August 16, 2011
Senator Boozman (R-AR)

Talk Politics Segment: Senator Boozman supports online sales tax collection

Senator John Boozman (R-AR) gave an interview with Roby Brock on Talk Politics on Monday and said that he believed online retailers should collect sales tax, just as bricks-and-mortar retailers do. For Senator Boozman, it seems to be an issue of fairness and states’ rights:

[Where I live] sales tax is about 9 percent . . . and so when [bricks-and-mortar retailers] start out 9 percent behind [because they have to collect sales tax and online retailers don't], then you’ve got problems. . . .

When you look at the trajectory, online sales are heading just upwards as quickly as they can do. If you’d asked me this question ten years ago I’d [have said] no, leave the internet alone, let them establish themselves. Right now they’re very much established, and so I don’t think it’s fair. . . .

I think it’s a states’ rights issue. I think the states ought to be able to allow [online sales tax collection], and I think . . . we need to make it such that the states can . . . enforce it, and then go from there. But I do think right now it’s not a level playing field, and you look at rural America, it’s very very difficult right now with the economy that we’ve got, but when you have this tremendous inequity it makes it that much harder.

We couldn’t agree more. States should be able to determine for themselves whether and how sales tax should be collected on online purchases, just like any other kind of purchase, and online and bricks-and-mortar retailers should all play by the same rules.

However, we are puzzled but encouraged by one statement Senator Boozman made: that he didn’t really like the Durbin bill (the Main Street Fairness Act) but would be working with Senator Durbin. We hope this signals a renewed sense of compromise to achieve a common good.

You can see the interview for yourself here; the comments on online sales tax collection begin at 19:12 and last just under two minutes. A summary of the interview is available here.

Bravo, Senator Boozman! Thank you for having the courage to speak out on this important issue and for committing to help protect states rights and local businesses.

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Group calls for boycott of Amazon, but Main Street Fairness Act is real fix

August 15, 2011

In an announcement earlier today, California “State Senator Loni Hancock (D-Oakland), Assembly Majority Leader Charles Calderon (D-Montebello), and Assembly member Nancy Skinner (D-Berkeley) joined dozens of California seniors, low-income families, people with disabilities, and health care and human services advocates” to launch the ThinkBeforeYouClickCA.org website opposing Amazon’s ballot referendum against California’s online sales tax collection legislation. The website urges people to cancel their Amazon accounts in protest of Amazon’s actions:

Every Californian has been affected by the cuts to balance California’s budget, none more than low-income seniors, students and people with disabilities. Now, online retail giant Amazon.com wants to overturn the one small victory we won this year in our campaign to close corporate tax loopholes: the Sales Tax law that would require online vendors to collect sales tax just as California’s “bricks and mortar” vendors do. This law will provide California with $200 million in desperately needed revenues to prevent further cuts to vital public services, while helping local business by closing the loophole that lets online retailers like Amazon.com undercut them. 

Fight back by telling Amazon.com to play by the same rules all other California businesses do! If Amazon.com is unwilling to contribute to the well-being of our state, then we need to tell Amazon.com that we won’t contribute to their profits!

According to a related Associated Press article, Amazon has spent $3 million to support its ballot referendum against California’s legislation.

While we understand why groups oppose the ballot referendum, there is a much better solution for everyone. The Main Street Fairness Act, now pending before Congress (S.1452 / H.R. 2701), would authorize states to require all retailers to collect sales tax—which would both level the playing field for bricks-and-mortar retailers and ensure that states receive the sales tax revenue that is already due and is needed to fund vital community services. What’s more, it will make collecting sales tax easier for all businesses.

Best of all, this is something that Amazon and California legislators can agree on—both support the Main Street Fairness Act. Whether you support or oppose California’s sales tax legislation, the Main Street Fairness Act makes more sense. It makes everyone play by the same rules, prevents further budget cuts, makes sale tax collection easier for businesses, and helps keep people employed (both by letting retailers keep their affiliates and by helping local retailers stay in business).

California’s Board of Equalization estimates that the state lost $1.145 billion in 2010 because most online retailers didn’t collect sales tax. As the Supreme Court ruled in 1967 (Bellas Hess) and 1992 (Quill), the only road toward recovering that lost revenue goes through Washington, D.C., via the Main Street Fairness Act—as we have said before.

Amazon has publicly stated that it supports the Main Street Fairness Act. Amazon’s Vice President for Global Public Policy, Paul Misener, even sent a letter thanking Senator Dick Durbin for introducing the bill:

Amazon.com has long supported a simple, nationwide system of state and local sales tax collection, evenhandedly applied to all sellers, no matter their business model, location, or level of remote sales.  To this end, I am writing to thank you for your bill that would allow states that sufficiently simplify their rules to require collection of sales tax by out-of-state sellers.

If you’re thinking about boycotting Amazon, consider putting your energy into supporting the Main Street Fairness Act instead. Contact your representative in Congress and let them know that the Main Street Fairness Act is the best solution for everyone. (Plus, it lets you keep your Amazon account.)

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Posted by FedTax

NRF urges congressional “supercommittee”: Main Street Fairness Act is key

August 11, 2011
NRF

NRF: Main Street Fairness Act is key

In a press release issued today, the National Retail Federation urged the congressional “supercommittee” on deficit reduction to focus on the economy and job creation, and it named the Main Street Fairness Act as one of three key initiatives Congress should enact:

The panel is an important opportunity to look at a range of policies and reset our national priorities so that we can put our nation’s economy back on track and put Americans back to work. For the nation’s retailers, this means a tax system that treats all players fairly instead of being riddled with special breaks, and it means looking at rules and regulations that kill jobs. . . .

The Main Street Fairness Act . . . would make it easier for states to require out-of-state Internet retailers to collect sales tax on sales to their residents. The legislation would end an unfair tax advantage held by online retailers over Main Street stores, which are struggling to keep their doors open and to continue providing employment in local communities across the country.

The other initiatives the NRF recommended: corporate tax reform and “relief from the employer mandate provision of the 2010 health care reform law.”

We’re glad to see the NRF point out how much the Main Street Fairness Act can contribute to the economy and job creation. By leveling the playing field between online and local retailers, the MSFA helps keep local stores open and employing local residents. It also means that states will receive the sales tax revenue that has been steadily disappearing as shoppers have moved online over the past decade—revenue that pays for schools, police, parks, and libraries.

In all the talk lately about the debt ceiling, deficit reduction, and the economy, we’ve been a bit concerned that the Main Street Fairness Act could get overlooked. It’s worth remembering that this bill, without raising taxes or creating a new tax, helps everyone:

  • Large and small retailers alike, both local and online, would find it easier to collect and remit sales tax;
  • State and local governments would benefit from much-needed revenue that funds vital services
      • States would no longer need to resort to controversial presumed nexus laws
      • States that have already implemented presumed nexus could repeal them
  • Affiliate marketers would no longer be threatened by state-by-state legislation
      • Retailers that rely upon affiliate marketing would be able to continue (or resume) doing so;
  • Consumers would no longer be subject to use tax self-reporting and payment obligations.

For anyone concerned that compliance with MSFA would be difficult or costly, we remind them that TaxCloud is absolutely free, and handles all aspects of compliance including calculation, collection, reporting, returns, and remittance—and even will respond to jurisdictional audits.

We agree with the NRF (and many other organizations) that the MSFA should be one of Congress’s top priorities.

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