Congratulations to Senator-elect Heitkamp!

November 26, 2012

Heidi Heitkamp

Congratulations to Heidi Heitkamp, who was just elected senator of North Dakota! Some of our readers may recognize her name: She was the North Dakota Tax Commissioner when the state brought suit against Quill Corp. in an attempt to require the catalog company to collect use tax on purchases made by North Dakota residents. The case famously went to the Supreme Court, which ruled that it would be too difficult for businesses to collect sales tax for states where they had no physical presence. But, equally important, the court also said that “the underlying issue here is one that Congress may be better qualified to resolve, and one that it has the ultimate power to resolve.”

Four bills currently before Congress attempt to do just that and close the online sales tax loophole. We look forward to Senator-elect Heitkamp’s support on the issue!


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.


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.”