Update: States eager for online sales tax action

February 7, 2013

In early December, we posted about states taking action on online sales tax collection.

As we noted then, states can’t do much without federal legislation, and support is growing in Congress for a bill that would give states full authority to require online retailers to collect sales tax.

But in the meantime, more states have started looking at what they can do.

Hawaii, Florida, and Michigan are all considering bills that would require an out-of-state retailer to collect sales tax if the retailer has an affiliate in the state.

Hawaii is also looking at adopting the Streamlined Sales and Use Tax Agreement, a set of guidelines that make collecting sales tax easy for retailers.

And while Virginia isn’t considering state action, it is counting on congressional action. The state’s proposed plan for transportation funding assumes that Congress will pass online sales tax legislation, allowing Virginia to collect hundreds of millions of dollars in uncollected sales tax.

States have already said that online purchases are subject to sales tax—but most of that sales tax goes uncollected. What they need now is federal legislation, and with each state-level bill or resolution, they’re sending Congress the clear message that the time to act is now. Let’s hope Congress is listening.


A return to state legislation for online sales tax

December 5, 2012

While the Marketplace Fairness Act continues to garner support in Congress, it remains in committee for the time being—which means that this holiday season, at least, the online sales tax loophole will stay open.

Without action from Congress on the issue of online sales tax, states are beginning to return to passing their own legislation. Two states, Michigan and Florida, have recently introduced bills that would require online retailers to collect sales tax.

Unfortunately, there’s not much states can do on their own—the Supreme Court said in 1967 and 1992 that states can’t require out-of-state retailers to collect sales tax. At the same time, though, the court said that Congress could and should decide the issue legislatively. That’s what the Marketplace Fairness Act is about.

We hope that all those state legislators, governors, local retailers, and others who are supporting state legislation will make their voices heard in DC, too. This is one instance where state action just isn’t enough. Congress needs to give states the right to decide for themselves whether they’ll require online retailers to collect sales tax.


Update on Florida’s push for online sales tax collection

October 17, 2011
Florida

Florida: Striding ahead on online sales tax collection

Florida State Senator Evelyn Lynn (R-7th) and State Representative Michelle Rehwinkel Vasilinda (D-9th) are continuing the fight for online sales tax collection in Florida.

According to this article on WCTV.tv, Vasilinda “has re-filed HB 321—the Streamlined Sales and Use Tax Agreement (SSUTA)—in the Florida Legislature for the upcoming 2012 session” and Senator Lynn re-filed the companion SB 430:

The Representative believes that the passage of her bill would help to resolve projected shortfalls in our state’s budget.

Representative Rehwinkel Vasilinda has also filed House Memorial 323, a resolution that requests the U.S. Congress adopt the Main Street Fairness Act on the national level. Collecting sales tax from Internet purchases has bipartisan support, and Florida State Senator Evelyn Lynn (R-Ormond Beach) has filed a companion bill as well as a Senate Memorial Resolution to Congress on the SSUTA.

In a previous blog post, we pointed to a great Tallahassee Democrat editorial praising Vasilinda. Unfortunately the editorial is now behind a firewall on the newspaper website (a search in the archives for “Pinching the loophole,” the original title of the article, will bring it up if you’re interested enough to pay to read the entire editorial)—but we did quote from it extensively in our post, and you can also read a portion of it on the Stand With Main Street Florida website.

But that’s just one of the posts we’ve written about the huge support for online sales tax collection in Florida. That support comes from business groups, the business-backed think tank Florida TaxWatch, small business owners, and of course, other newspaper editorials.

As our regular readers may recall, we even traveled to Florida in April of this year to attend their Main Street Fairness Day in Tallahassee, where we spoke alongside other Florida businesses in support of the corresponding bills from the Florida legislature’s previous session.

We’re behind Sen. Lynn and Rep. Rehwinkel Vasilinda 100% in their efforts on behalf of Florida. It seems pretty clear that most of Florida’s residents and businesses are behind them, too.


Growing momentum for local online sales tax movement

October 13, 2011

The local and state efforts toward online sales tax collection is gaining momentum, as is clear from the recent deluge of local articles on the issue. Here’s a selection:

– from the Holland Sentinel (MI), “The case for fairness: A sale is a sale is a sale”:

According to a report released last month by Lansing-based Public Sector Consultants, the sales tax loophole has a significant negative impact on job makers and the state’s economy. The study found that closing the loophole would directly lead to the creation of as many as 1,600 new jobs, would increase investment in Michigan’s economy in the form of sales at brick-and-mortar retail outlets by as much as $126 million per year and would save the state as much as $141.5 million in otherwise lost sales tax revenue from electronic remote sales in 2012 alone.

– from NorthJersey.com, “Internet retailers might lose tax edge”:

In my mind, it comes down to a question of fairness, as stated by John Holub, president of the New Jersey Retail Merchants Association:

“Online-only retailers are costing the State of New Jersey hundreds of millions of dollars in tax revenue and are underselling New Jersey’s small-business owners. It’s time for New Jersey to modernize its tax structure and close this unfair tax loophole.”

– from the Bismarck Tribune, “It’s simply an issue of fairness”:

A customer goes into a local business to check out a product. This person finds a computer, makes an online purchase of that same item and avoids paying the sales tax.

Is that fair to a North Dakota brick-and-mortar business that employs our state’s citizens, invests in the community and helps drive the local economy? I don’t think so.

That’s why we need The Main Street Fairness Act. This legislation will close the loophole that gives online retailers a competitive advantage over the local businesses.

– from Tampa Bay Online, “Solution sought for sales tax ‘loophole'”:

Some shoppers look over a product at local stores and then buy it online in hopes of avoiding the sales tax, Alpine said. Stores end up being treated like a showroom.

“It needs to be an equal playing field,” he said.

“Without a doubt this is an enforcement issue that ultimately can only be fully resolved if the federal government weighs in,” state Rep. John Legg, R-Port Richey, said in an email.


St. Petersburg (FL) Times: Florida needs Main Street Fairness and Streamlined

October 4, 2011
St. Petersburg Times

St. Petersburg Times: Florida need Streamlined and Main Street Fairness

A new editorial in the St. Petersburg Times urges Florida lawmakers to adopt the simplified sales tax guidelines of the Streamlined Sales and Use Tax Agreement and support the federal Main Street Fairness Act.

The whole editorial is worth reading—it’s not long, and it’s cogent, incisive, and well-argued—but we had to quote this section in its entirety:

For years, every major Florida business group has pushed for the state to join the Streamlined group, rightly arguing the outdated tax code discriminates against their members. While any business with a traditional store in Florida must collect the 6 percent state sales tax on goods, out-of-state online-only merchants don’t. That gives them an enormous pricing advantage. Florida TaxWatch has estimated the shift to e-commerce has cost at least 100,000 Florida jobs. And a University of Tennessee study estimates Florida will lose more than $800 million in uncollected sales taxes this year for goods bought through merchants like Amazon.com.

Even Republican-controlled Texas has joined California and New York in championing this cause of tax fairness. Meanwhile, in Tallahassee, favoring out-of-state carpetbaggers over businesses that employ Floridians is far more acceptable. (emphasis added)

We talked in a recent post about how not collecting sales tax online has cost jobs by keeping funds that might pay for new firefighters and police out of city coffers. In Oklahoma City, for instance, the mayor suggested that online sales tax collection could have created 100 to 150 jobs for firefighters and police officers.

The TaxWatch statistic in this St. Petersburg Times editorial refers to another way that e-commerce is costing jobs. Bricks-and-mortar retailers employ far more people than online retailers. In fact, for every person hired at an online retailer, four would have been hired at a bricks-and-mortar retailer.

We need to level the playing field between online and bricks-and-mortar retailers and give bricks-and-mortar retailers a fighting chance to protect retail jobs.

Take a look at the rest of the St. Petersburg Times editorial. It’s worth a read.


Florida business groups inspired by California-Amazon deal

September 19, 2011

According to a Sarasota Herald-Tribune (FL) article, Florida business groups are hopeful that the deal between California legislators and Amazon—which repeals California’s online sales tax collection law in exchange for the reinstatement of Amazon’s 10,000 California affiliates and requires both groups to work together for the passage of the federal Main Street Fairness Act; if the federal bill doesn’t pass by the end of July 2012, the California law will be reinstated—will “help convince [Florida] lawmakers to take similar steps”:

Mark Wilson, president of the Florida Chamber of Commerce and a member of the Florida Alliance for Main Street Fairness, saw the California deal as a positive sign for Florida retailers.

“If Amazon can collect and remit sales taxes in California, it can do it [in] Florida,” Wilson said. “Recently, both Texas and California passed E-fairness legislation to level the playing field for small businesses. Now, Amazon’s agreement to collect sales tax in California — just like Main Street retailers — proves that they don’t need a special tax deal at the expense of Florida-based small businesses either.”

Wilson said Florida lawmakers now have “a unique opportunity to put small business job-creation ahead of Amazon’s tax subsidies.”

While Wilson has a point—I don’t think anyone would argue that it’s too difficult for Amazon to collect Florida sales tax (especially with services like TaxCloud available)—Amazon has good reasons to support federal online sales tax collection legislation (the Main Street Fairness Act) and oppose state-by-state laws. While the Main Street Fairness Act would actually make it easier for businesses to collect sales tax, state-by-state laws have become so numerous and varied that they make it extremely difficult for businesses to collect sales tax in more than one state.

One way that the Main Street Fairness Act makes it easier for businesses to collect sales tax is by authorizing online sales tax collection only in those states that have simplified their sales tax laws by joining the Streamlined Sales and Use Tax Agreement (SSUTA).

Although Florida’s recent bill to join SSUTA stalled, we would urge Florida lawmakers to pass that bill, and soon. Not only will it make it easier for businesses to collect Florida sales tax, but it will also put Florida in the perfect position to require all online retailers to collect sales tax when the Main Street Fairness Act—which now has the full support of California and Amazon behind it—becomes law.

Joining SSUTA will also make it clear to Congress that Florida, like California and Amazon, supports the Main Street Fairness Act.

Many states have been tempted to skip the step of joining SSUTA and go straight to requiring some online retailers (mostly large ones, like Amazon) to collect sales tax. California started out taking that approach. But as California and other states have discovered, that approach ends up hurting businesses, which have to deal with all the complexities of state-by-state sales tax laws, and in-state affiliate marketers, which are usually dropped by retailers so that the retailer can try to avoid collecting state sales tax. The end result is fewer jobs in the state and no increase in collected sales tax.

Joining SSUTA is the better approach. It simplifies sales tax collection for businesses while leveling the playing field between online and Main Street retailers. We hope this is the approach Florida decides to take.


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.