[STORE LETTERHEAD]

The Honorable [REPRESENTATIVE/SENATOR NAME]
[FULL ADDRESS]

[DATE]

Dear [Mr./Ms.][SENATOR][LAST NAME]:

As an independent bookseller based in [CITY], North Carolina, I am urging you to support Internet sales tax provision in the Appropriations Act of 2009. This provision would clarify state laws to require non-North Carolina merchants with online affiliates in the state acting as sales agents on their behalf to collect sales tax on purchases shipped into North Carolina. This bill would play a significant role in leveling the playing field for North Carolina businesses and help secure needed revenue to support essential local services. We are urging you to close this tax loophole now by supporting the Internet sales tax legislation currently under consideration in the Committee on Finance.

Not only is the tax avoidance being practiced by these out-of-state retailers unfair to the retailers throughout North Carolina that are collecting sales tax for online sales, but it has clear economic implications for the state, especially considering the current economic climate. According to the Center on Budget and Policy Priorities, our own state reported a mid-year FY2009 budget gap of $2 billion. This number is only going to get worse if states unintentionally continue to subsidize out-of-state businesses by allowing remote merchants with nexus in the state to skirt existing tax laws, thereby letting millions of dollars in sales tax revenue go uncollected. Now more than ever, North Carolina has an obligation to ensure sales tax equity.

Federal law clearly defines nexus as a retail store, warehouse, office, or sales agent. I believe it is indisputable that any out-of-state online retailer that has one or more affiliates based in North Carolina -- affiliates that clearly act as solicitors on the online retailer's behalf and earn commissions based on sales -- has nexus in our state. These out-of-state online retailers should therefore be charging sales tax. North Carolina booksellers that have e-commerce operations collect and remit sales tax, and so should merchants outside our state that have nexus in the state.

When the state allows these online retailers to continue their sales tax avoidance practices, North Carolina's citizens are the primary losers, as potential tax revenue is uncollected -- monies that fund such essential services as schools and first-responders. According to a recently published University of Tennessee study, State and Local Government Sales Tax Revenue Losses From Electronic Commerce, in 2008, the total state and local sales and use tax revenue loss resulting from failure to collect current taxes on e-commerce sales in North Carolina was $145 million in 2008. As online shopping continues its robust growth, this figure is expected to balloon to more than $213.8 million in 2012. Furthermore, the study stressed that this failure to collect taxes that are due has put local retailers at a competitive disadvantage to e-commerce competitors as "consumers browse on Main Street but then make their purchases online to evade the tax."

In 2008, New York State signed into law a provision that required out-of-state merchants that have clear nexus in the state to collect and remit sales tax. Though the provision was initially challenged by Amazon.com, a New York State Supreme Court judge dismissed the online retailer's lawsuit. Amazon.com is currently collecting New York sales tax and has maintained its affiliate network in the state.

The time for North Carolina to act is now. The results of sales tax inequity can be seen in the many empty storefronts on Main Streets throughout North Carolina. Sometimes, however, it doesn't result in a store closure, but it in lost sales tax through decreased sales and lost income tax through job cuts. A downturn on Main Street creates a ripple effect that echoes throughout our state's economy. In the end, it's the residents of North Carolina who shoulder this burden through higher property or school taxes. So it's important to understand that when out-of-state retailers with affiliates in our state shirk their responsibility to collect and remit sales tax, it doesn't just affect a few small businesses here or there, it hurts the state's entire economy.

Importantly, I am not discussing any new "Internet taxes." I am simply asking you to equitably enforce existing tax laws by supporting the Internet sales tax provision in the Appropriations Act, which clarifies existing sales tax laws to require out-of-state merchants with nexus in the state -- via office, warehouse, sales agent, or affiliate link -- to collect and remit sales tax on purchases made by North Carolina residents.

Thank you for your consideration.

Sincerely,
[NAME, STORE NAME & ADDRESS]

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