March 30, 2011
This terrific article by St. Louis Post-Dispatch columnist Bill Nicklaus offers a great summary of the debate over online sales tax and explores where the debate may go in the future.
We found this section particularly interesting:
Convenience and selection are the biggest reasons for the growth of e-commerce, but the tax-free shopping environment doesn’t hurt. One study, done by two Georgia State University professors in 2003, estimated that collecting sales taxes would reduce online purchases by 6 percent.
If that’s accurate, then traditional retailers are already losing some business because of the disparate tax treatment. They’ll lose more as e-commerce continues to grow.
It’s great to see a study confirm what we’ve long known from anecdotal evidence: although most consumers shop online for convenience and selection, some consumers shop online specifically to avoid paying sales tax, which means those are sales that would otherwise go to local retailers.
Among the other hot topics Nicklaus covers are Illinois’ recent enactment of affiliate nexus legislation and the $269 million bill that Texas recently sent to Amazon for uncollected sales tax.
Nicklaus notes that Senator Dick Durbin (D-IL) is about to introduce the Main Street Fairness Act in Congress because “he wants a federal version of Illinois’ Amazon tax, making it harder for online firms to play one state against another.” (A quick note of clarification: The column mentions that Illinois’ new tax law is called the Main Street Fairness Act. The federal legislation is also called the Main Street Fairness Act, but unlike Illinois’ law, it would allow all states to require online retailers to collect sales tax.)
Nicklaus closes with a strong endorsement of federal legislation and an equally strong condemnation of Amazon’s tactics: “The sales tax has long been viewed as an efficient and fair way of raising government revenue. It shouldn’t become a wedge that favors some retailers over others. If states can’t stand up to Amazon on their own, then Congress must find a way to end the bullying.” (emphasis added)
March 18, 2011
WIRED: Amazon Spars With States Over Taxes
Wow, it has been a busy 24 hours in the news cycle for us!
Just a few hours ago, Sam Gustin of Wired magazine, a forum known for its technologically sophisticated editorial staff and readership, published an article that is clearly supportive of Amazon’s fight with the affiliate nexus laws being enacted across the country. The article mentions the Streamlined Sales Tax effort, but then it quotes David Brunari, executive editor of Tax Analysts, as saying that Streamlined has “been going on for 10 years and they’re no closer today than they were five years ago to making this work.”
This is an odd and somewhat unexpected statement from the Tax Analysts group, who are no strangers to this topic. About a year ago Tax Analysts hosted a debate at the National Press Club on this exact topic (we attended and blogged about it at the time). They also published at that time a very thoughtful article on affiliate nexus laws, written by Cara Griffith, then the legal editor for TaxAnalysts’s weekly journal, State Tax Notes (she has since moved on to become a manager with PriceWaterhouseCoopers LLP).
In Ms. Griffith’s article, she argues that “Amazon tax” laws are ultimately damaging to the Streamlined Sales Tax efforts. The greatest cause for concern, she said, is that the growing number of state affiliate nexus laws may mislead federal legislators into believing that affiliate nexus laws are a more viable option than Streamlined.
We hope Wired will continue to track and report on this important story, and hopefully we will have the good fortune of briefing their editorial staff on this matter soon. Naturally, we posted a comment on the Wired article, too.
March 17, 2011
States Try To Collect Online Retail Sales Tax
With last week’s passage of affiliate nexus legislation in Illinois making headlines, Robert Siegel of NPR’s “All Things Considered” interviewed Forbes executive editor Janet Novack about online sales tax.
Ms. Novak has written about this subject extensively; in fact, we’ve blogged about an article of hers in the past. In her NPR interview, she provides a clear, concise, and accessible description of the problems facing states and the logical position Amazon has taken—that “Congress [needs to] to pass a national law that requires collection by everyone […] but in the interim, we’re not going to disadvantage ourselves by collecting.”
You can listen to the interview (4 minutes, 15 seconds) or read a transcript of it here. As always, we welcome your comments.
March 11, 2011
Wall Street Journal: Amazon Takes Action in Illinois as War on Sales Taxes Continues
Today’s decision by Illinois governor Pat Quinn to sign HB 3659, affiliate nexus legislation, confirms that states are willing to try anything to narrow the budget gaps they face. The drawbacks to such legislation are well-known: loss of income for affiliates and the potential for extensive litigation (as New York has been experiencing for the past three years).
Amazon has already announced its decision to cancel its relationships with Illinois affiliates, as reported in this Wall Street Journal article. Other online retailers are expected to follow suit.
The bright spot for Illinois-based affiliates is that other large retailers—those who already collect sales tax online due to their brick-and-mortar presence—have offered to step in. Barnes & Noble, Wal-Mart, Best Buy, and Sears are among the retailers that have reached out to Illinois affiliates. Also, the Stand with Main Street organization has begun a new “matchmaking” service to pair affiliate marketers that have been dropped by Amazon with other retailers.
We hope Illinois will soon join its neighboring states and join the Streamlined Sales and Use Tax Agreement (SSUTA). Illinois senator Dick Durbin is expected to introduce the Main Street Fairness Act in Congress any day now. Once enacted, that law will enable SSUTA states to require online retailers to collect the sales tax that is already due on all online purchases.