Dear Governor [NAME]:
As an independent business in [STATE NAME], I am writing to update you on an important action New York State recently took to help ensure sales tax fairness, and to recoup tens of millions of dollars of lost sales tax revenue. New York's actions have clear implications for [STATE NAME].
As you may know, New York State recently took a giant step forward to level the playing field with regard to the equitable collection of sales tax from Internet sales. In its new budget, New York is requiring out-of-state merchants that have clear nexus in the state, to collect and remit sales tax. This long overdue sales tax law clarification will garner New York State a projected $47 million in new revenue this fiscal year, and potentially more than $70 million next year. And while Amazon.com has chosen to challenge the provision in court, it has also announced that as of June 1 it will begin collecting sales tax on sales to New York State residents.
I am calling on you to follow New York State's lead and equitably enforce existing tax laws by requiring out-of-state retailers and commercial resellers with nexus in our state to collect sales tax.
Like so many other states around the country, [STATE NAME] is faced with a daunting challenge: how to balance the budget at a time when costs are increasing and revenues are in decline. In almost every state throughout the country, the budget numbers are troubling. According to the National Conference of State Legislatures State Budget Update, some 23 states are faced with projected budget shortfalls for fiscal 2009; at least 16 states expect to reduce spending or eliminate programs; and eight are considering tax increases. Moreover, 16 states reported that their general sales tax collections fell below projections, and in nine of these collections were failing to meet reduced estimates; 12 states indicated that personal income tax collections would not meet projections; and 16 noted that their corporate income tax collections were below expectations.
These numbers are only going to get worse if states continue unintentionally 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. As online shopping grows, more and more consumers will eschew locally owned businesses for the tax-free shopping offered by out-of-state online retailers and commercial resellers. Left alone, this exodus will be devastating to our economy. It will force an increasing number of in-state businesses to cut staff and close each year, meaning the decline in revenue from sales, personal, and corporate income taxes will simply accelerate.
Faced with such grim financial forecasts, states around the country are aggressively seeking solutions. New York State has provided one answer, and that is to enforce existing sales tax laws now. Importantly, I am not discussing any new "Internet taxes." I am simply urging the state taxing authorities to look to New York's example and enforce the sales tax laws already in place.
Thank you for your consideration.
[NAME, STORE NAME & ADDRESS]