Amazon.com has been battling with states across the country over whether or not the company should collect sales taxes. The company’s practice of not collecting sales taxes in most states makes it difficult for brick-and-mortar stores to compete with their prices, and also keeps tax revenue out of states’ coffers in a time when many are struggling with budget deficits.
Many states are fighting back with so-called “Amazon laws,” which require online retailers to collect sales tax if they have physical affiliates within the state.
Illinois recently passed the Mainstreet Fairness Bill. Amazon has countered by threatening to terminate relationships with affiliates in Illinois and in other states with similar legislation. The Alliance for Main Street Fairness has launched this web site to connect affiliates “about to get thrown under the bus” with other online retailers who do collect sales taxes.
Last fall, Texas sent Amazon a bill for $269 million dollars in back taxes. Amazon responded by closing their Texas warehouse, and the dispute is still unsettled.
By 2012, online retailers will owe states an estimated $23 billion dollars in uncollected sales taxes.
One response
The problem with the state level e-Fairness initiatives is that they target remote online retailers who use in-state affiliate marketing partners and naively assume that they will continue the relationship post-legislation. But, as Amazon has demonstrated, they will still avoid collecting sales tax by simply cancelling all affiliate relationships.
The proper venue where this matter should be addressed is Washington by resurrecting the “Sales Tax Fairness and Simplification Act,†which had bi-partisan sponsors but got nowhere in the last congress and its principal sponsor is now retired. But this federal legislation gives the force of law only to states which enacted the “Streamlined Sales Tax Agreement†which 24 states have so far adopted. State legislators should focus on this step first.
This will restore a level playing field to brick and mortar retail and bring back jobs and vibrancy to mainstreet retail. Plugging such corrupting loopholes will foster a business ecosystem of free, fair and level playing field to flourish, bring back jobs and vibrancy to main street retail and much needed revenues to the state.
An outfit called Alliance for Main Street Fairness (StandWithMainStreet.com) has been formed recently to lobby to end the present online sales tax loophole. Big box retail and their commercial real-estate landlords must regard the present competitive handicap from online competitors as an existential threat and crank up their lobbying efforts in Washington.
Here is a good writeup on this issue.
“Every Day’s a Tax Holiday: How Amazon.com undersells Best Buy, the Apple store, and almost everybody else.”
http://www.slate.com/id/2275552/
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