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.


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.


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.


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.


Facts on Main Street Fairness Act and Streamlined Sales Tax, including job figures

August 24, 2011

We recommend our readers take a look at two sources of thorough backgrounds on the Main Street Fairness Act, the Streamlined Sales and Use Tax Agreement, and online sales tax collection in general.

A fact sheet issued by the International Council of Shopping Centers is worth reading in its entirety, but we were particularly interested in some of the statistics it includes, which we hadn’t seen before:

  • One of out every 11 U.S. jobs is shopping center-related; for every 100 individuals directly employed at regional shopping centers, an additional 20 – 30 are supported in the community due to multiplier effects
  • Each $1 million of new retail sales adds 3.61 jobs. To illustrate: 
    • $1 million in new sales at Best Buy’s average e-commerce and B&M shares is expected to create 3.47 jobs;
    • The same $1 million in new sales at Amazon’s average is expected to create 0.88 jobs.

Again, it’s definitely worth reading the entire fact sheet. The simple bulleted arrangement is surprisingly effective, and with each fact, the implicit argument for the Main Street Fairness Act becomes stronger and stronger.

The other piece is an article by Sylvia Dion at allBusiness (we blogged about an earlier article of hers on the Main Street Fairness Act). This time she focuses on the Streamlined Sales and Use Tax Agreement (SSUTA) and how it works in the Main Street Fairness Act. Unlike any other article we’ve seen on the subject, this one discusses SSUTA’s small seller exception:

One definition, not elaborated on in the legislation, but found in the SSUTA, is the small seller exception. Cory Barwick, Lead Tax Analyst at CCH -a Wolters-Kluwer business, explains that the SSUTA’s small seller exception “allows businesses with less than $500,000 in annual revenue to be exempt from the remote (out-of-state) seller collection requirement.” According to Barwick, who reports on Streamlined Sales Tax developments for SalesTaxSupport.com, “the Streamlined Sales Tax Governing Board has made many revisions to the SSUTA since its inception in an effort to entice states to become members to the agreement, including the November 2010 update to the small seller exception,” which he adds, “makes sense as these businesses are the ones that generally cannot afford the expense associated with the collection of remote taxes.”

Of course, we feel that collecting sales tax online shouldn’t cost businesses anything, which is why we’ve made TaxCloud free to all retailers. But if small businesses are concerned about the potential costs of online sales tax collection, the small seller exception should put them at ease.

Dion also makes it clear that the Main Street Fairness Act is not a nationwide “Amazon tax”:

By the way, although the proposed Main Street Fairness legislation and the state “Amazon laws” have a similar goal—to require the collection of sales tax by out-of-state sellers who do not have a physical presence in their statethe Main Street legislation is not a national “Amazon law.”  These state laws are presumptive nexus laws, meaning that if a business engages in the activity described in the law, a presumption of “nexus” arises. Nexus, an oft overused term, means that a business has established a sufficient connection to a state to allow that state to subject the business to taxation or, in the case of sales tax, to impose a sales tax collection requirement. State “Amazon laws” focus on an expanded view of nexusin essence, that the use of in-state “affiliates” who post a web-link to the out-of-state seller’s on-line store is akin to creating a physical presence in the state.
But the Main Street Fairness legislation makes no mention of nexus. What’s key here is that states must be full-member SSUTA states in order to have the right to assert a collection requirement on out-of-state sellers. Essentially, the use of in-state “affiliates” that refer customers to an out-of-state seller via a web-link becomes irrelevant under the Main Street legislation.

In other words, under the Main Street Fairness Act, there would be no need for retailers like Amazon and O.co (formerly Overstock.com) to drop their affiliates—no need for states to pass sales tax laws focused on affiliates in the first place.

We have to disagree with Dion on one subject, though. At the end of the article, she asserts that the Main Street Fairness Act doesn’t have bipartisan support. We disagree. While the official sponsors of the bill are Democrats, numerous Republican politicians have voiced their support for this legislation—among them, Senator John Boozman, Tennessee Governor Bill Haslam, and Indiana State Senator Luke Kenley. There is absolutely nothing partisan about the Main Street Fairness Act—it doesn’t create a new tax or raise taxes; it simply ensures all retailers follow the same sales tax rules; and it gives states complete control over their own sales tax laws—and we believe that we’ll see more and more Republicans voicing support for the bill in the days to come.


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.