THUD (Part 2) California legislature repeals ABX1 28 – All to work to pass the Main Street Fairness Act by July 2012!

September 10, 2011

California legislature approves amended AB 155, repeals ABX1 28! AMZN to reinstate CA affiliates!

[UPDATED 9/10 @ 6:30 AM PDT] We were very excited to learn that in the final hour of their 2011 legislative session, the California legislature overwhelmingly passed a heavily amended version of AB I55  (California Senate voted 39 to 1 in favor, the Assembly voted 59 to 8 in favor).

Although the text of the amended bill is not yet now available for public inspection (text of substantive amendment included below), it has been reported on by several authorative sources, including California Senate Republican Leader Bob Dutton (R-Rancho Cucamonga), California BOE Member George Runner, the Associated Press, and the San Francisco Chronicle.

Here’s what we have learned so far:

  1. AB 155 (as amended) repeals ABX1 28 (see our original post “THUD! Did Congress Hear That?“)
  2. Amazon will reinstate its 10,000+ California affiliates

    “This bipartisan, win-win legislation will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates,” Paul Misener, Amazon’s vice president of global public policy, said in a statement.

  3. All parties (including California legislators, local and national retailers, and Amazon) will work with Congress to pass federal legislation (the Main Street Fairness Act) by July 2012!
  4. If Congress fails to act by July 2012, the original terms of ABX1 28 will be reinstated.

As we have stated several times before, we firmly believe this is the best course of action:

As states such as California and Illinois enact affiliate nexus legislation (so-called Amazon tax laws) to attempt to collect sales tax due on online purchases, small businesses across the country are being caught in the crossfire. Affiliate marketers are forced to either find entirely new sources of revenue or flee to another state. Meanwhile, online retailers that rely on affiliate marketing are forced to either eliminate their established sales and marketing teams or come into compliance with the new laws.

The better solution is the anticipated Main Street Fairness Act, which incorporates the Streamlined Sales and Use Tax Agreement (SSUTA). SSUTA streamlines and simplifies state sales tax regulations, making it easy for retailers to collect sales tax for multiple states. SSUTA is the cooperative effort of 44 states (including California and Illinois), businesses, political leaders, and industry associations. States that adopt SSUTA have committed to make sales tax collection easier for all retailers, online and offline, large and small.

Although AB 155 has passed the legislature, Governor Brown has until October 7th to sign it into law; if he doesn’t—well, then all bets are off. Timing-wise, one would expect (or at least hope) the governor will make a decision in advance of the end-of-September deadline for Amazon to submit its half-a-million signatures in support of its referendum for voter repeal ABX1 28.

We are truly inspired by this dramatic twist of events in the legislature of the eighth-largest economy in the world. We look forward to the promised bipartisan effort in Washington, DC, to enact the Main Street Fairness Act by July of next year!

We would also like to send our most sincere (and hopefully not premature) congratulations to all of our affiliate friends and supporters in the state of California!

[UPDATED 9/10 @ 6:30 AM PDT]  The new Section 6 represents the substantive amendment to AB155:

SEC. 6.

  1. (a) Sections 1 and 2 of this act shall become operative on the effective date of this act.
  2. (b) Section 3 of this act shall become operative on either of the following dates:
    1. If federal law is enacted on or before July 31, 2012, authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller, and the state does not, on or before September 14, 2012, elect to implement that law, Section 3 of this act shall become operative on January 1, 2013, and Section 2 of this act shall become inoperative on that same date.
    2. If federal law is not enacted on or before July 31, 2012, authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller, Section 3 of this act shall become operative on September 15, 2012, and Section 2 of this act shall become inoperative on that same date.
  3. (c) The Director of Finance shall, on or before August 15, 2012, certify in writing to the Governor, the Senate Committee on Rules, the Speaker of the Assembly, and the State Board of Equalization whether or not federal law has been enacted on or before July 31, 2012, authorizing the states to require a seller to collect taxes on sales of goods or services to in-state purchasers without regard to the location of the seller.
  4. (d) For the period between June 28, 2011, and the effective date of this act, state law regarding the imposition and collection of use taxes, including, but not limited to, any reporting requirement imposed on a seller, shall be administered and applied in accordance with state law as it read on June 27, 2011.

SEC. 4. SEC. 7. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to lessen the burden at the earliest possible time on small businesses that are otherwise required to collect use tax, it is necessary that this act take effect immediately.

In order to clarify and confirm at the earliest possible time the obligations of certain retailers to collect use taxes from California purchasers, it is necessary that this act take effect immediately.

TaxGirl guest post about Amazon and the Main Street Fairness Act

August 30, 2011
Forbes - TaxGirl Guest Post: Why Amazon Is Doing the Right Thing for Online Sales Tax

Forbes - TaxGirl Guest Post: Why Amazon Is Doing the Right Thing for Online Sales Tax

The infamous TaxGirl (Kelly Phillips Erb), a Forbes contributor, has published our CEO’s article!

Guest Post: Why Amazon Is Doing the Right Thing for Online Sales Tax

Our CEO wrote this opinion piece at the invitation of TaxGirl, for her to publish while on her well-deserved summer vacation.

Main Street Fairness Act could mean elimination of inheritance tax, says IN lawmaker

August 24, 2011

Indiana State Senator Luke Kenley, chairman of Indiana’s Senate Committee on Appropriations and president of the Streamlined Sales Tax Governing Board, last week issued a statement urging Indiana’s congressional delegation to support the Main Street Fairness Act, which was introduced on July 29 by Senator Dick Durbin. He suggested that should the bill pass, Indiana could eliminate the state’s inheritance tax:

Kenley (R-Noblesville) also said he hopes state lawmakers would agree to use the nearly $200 million in additional revenue the state would receive from the passage of the federal legislation to eliminate Indiana’s inheritance tax and reduces others . . . .

“Hoosier bricks-and-mortar businesses are at competitive disadvantages with online retailers who often do not collect sales taxes on Internet purchases, costing our state as much as $200 million annually,” Kenley said. “Though consumers are required to report and pay a ‘use tax’ on Internet purchases when they file their taxes each year, many unknowingly fail to do so, costing Indiana and other states substantial revenue—an estimated $11.4 billion nationwide each year.”

Kenley isn’t the first to suggest that improving the collection of sales tax could allow states to cut other taxes. As we blogged about a few months ago, West Virginia delegate John Doyle has said that if online retailers regularly collected West Virginia sales tax, the state might be able to end its tax on groceries.

Kenley also pointed out that the Main Street Fairness Act will benefit Indiana retailers as well as the state’s schools and other essential services:

A 1992 U.S. Supreme Court ruling, known as the Quill decision, determined retailers are not required to collect sales taxes in states where they do not have physical locations unless mandated by Congress. As a result, many consumers visit a store to compare or test products, but then make their purchases online—often avoiding payment of sales taxes, Kenley said.

If enacted, the Main Street Fairness Act would create a uniform sales-tax collection system ensuring all businesses—both online and brick-and-mortar retailerscollect uniform sales tax for purchases. The act would also relieve consumers of the legal burden to report to state tax departments the required sales tax they owe for online purchases.

“I am asking our congressional delegation to support a modern, streamlined, pro-business initiative that will help our thousands of retailers who are being discriminated against under the current policy,” Kenley said. “This is not a new tax but one that is already owed and not being collected. With sales tax serving as Indiana’s largest source of revenue, our K-12 schools, higher education institutions, public safety and other essential state services are hit the hardest by the current system. It’s time we level the playing field for our local businesses and remove this unfair burden from Hoosier consumers.”

We applaud Senator Kenley for making his support for the Main Street Fairness Act known to his state’s DC representatives. The legislation is hugely important for states, since it gives them the ability to determine for themselves how (and whether) online sales tax should be collected for the state. But since it’s federal legislation that will be enacted (or not) by Congress, state lawmakers need to make sure their representatives in DC know just how important the bill is for them.

We hope other state lawmakers will follow Senator Kenley’s lead and contact their state’s representatives in Congress to let them know that they support the Main Street Fairness Act.

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

August 18, 2011

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).

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 )
+1 203-803-2048

View a PDF of this Press Release

More business groups supporting the Main Street Fairness Act

August 17, 2011

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.