Last December, seven independent trade groups, including the American Booksellers Association, sent a letter to the governors in the 45 states with sales tax calling on them to equitably enforce existing tax laws by requiring out-of-state retailers and commercial resellers with nexus in states to collect sales tax. Thus far, officials from 10 states have responded to, or have acknowledged, the letter: Indiana, Kansas, Louisiana, Maine, New York, Ohio, Tennessee, Washington, West Virginia, and Wyoming.
Now, ABA is again strongly encouraging booksellers in the remaining 35 states to write to their state governors to urge them to enforce sales tax laws, even if booksellers have previously done so. To help in this important outreach, ABA has prepared a template letter that booksellers can adapt and send.
"The tremendous growth in Internet shopping this past holiday season makes it all the more clear how important it is for states to enforce existing sales tax law," said ABA COO Oren Teicher. Recently, the Wall Street Journal reported that online holiday sales grew by 19 percent. In contrast, retail sales this holiday season only rose 3.6 percent, according to Reuters.
"While this holiday season has been great for online retailers, it has not been very bright for the 45 states that have lost significant revenue from uncollected sales tax from these online sales," said Teicher. "And because this sales tax shortfall is only going to grow worse as Internet sales increase we believe that now is the time to act. That is why we are asking booksellers to once again write their governors about this very serious issue."
Many of the responses to the trade groups' letter were positive and acknowledged that the collection of sales tax on online purchases was a significant issue. Some officials made mention of their states' participation in the Streamlined Sales Tax Project.
Richard Cram, director of the Kansas Department of Revenue, wrote, "Please be advised that Kansas has been very proactive on this issue," and he noted, "Kansas has also enacted an 'affiliate nexus' statute.... The Department pursues any leads concerning retailers making remote sales to Kansas customers where there is a legal basis to claim that those retailers have nexus."
Richard A. Levin, tax commissioner for the Ohio Department of Taxation, stressed that Ohio is an associate member of SSTP, and he noted: "Let me assure you that when it comes to trying to create a level playing field for Ohio's businesses that must compete with out-of-state businesses that avoid collecting Ohio sales tax, ODT shares the same interest as the 'brick and mortar' vendor community."
Wrote Jack Cashman, economic adviser to Maine Governor John Baldacci: "We recognize that tax revenue continues to be lost on online sales. Maine Revenue enforces the registration requirements of online retailers when nexus exists in Maine."
ABA is urging booksellers in the 35 states that have not responded to the trade groups' letter to contact their states' governors -- even if they previously sent a letter in December. Below is the letter that booksellers can adapt and send. A list of the addresses and telephone and fax numbers of each governor's office is available on www.nga.org.
To have the greatest impact, booksellers should mail a hardcopy of the letter on store letterhead to their governor's office. ABA is also asking booksellers to fax a copy of their letter to BTW Senior Editor David Grogan, at (914) 591-2720, or to send it via e-mail to firstname.lastname@example.org. --David Grogan
Dear Governor [NAME]:
As an independent retailer in the state of [STATE NAME], I am calling on you to equitably enforce existing tax laws by requiring out-of-state retailers with nexus in our state to collect sales tax. Each year, [STATE NAME] is losing tax revenue to online retailers, many of whom have nexus in the states due to affiliate relationships. I am calling on you to take the lead in this matter by enforcing our existing sales tax laws.
This sales tax shortfall will grow worse each year as online shopping grows. The Wall Street Journal reported that online sales this holiday season grew by a remarkable 19 percent. In contrast, retails sales this holiday season only rose 3.6 percent, according to Reuters. Clearly, when you favor out-of-state online retailers over [STATE NAME]-based businesses like mine, you are allowing millions of dollars in tax revenue to go uncollected. At a time when states across the country are dealing with significant budget shortfalls, this is a very serious matter.
As holiday sales figures clearly show, in-state retailers have a tough time competing against out-of-state online retailers that can entice holiday shoppers with tax-free shopping. What's worse, customers believe they are getting a deal because they don't have to pay tax, and some states actually proudly declare that they are helping consumers by not enforcing these laws during the holidays. But here's the reality: When states like ours allow out-of-state businesses to unfairly usurp dollars that normally would have been spent in-state, [STATE NAME]'s citizens are also losers, as potential tax revenue from both sources is uncollected -- monies that fund such essential services as schools and first-responders.
I am asking you to step up to the plate and defend our state's homegrown businesses. Every analysis makes clear that locally owned businesses have far greater economic impact on their communities, contribute more to local charities, and are largely responsible for our villages, towns, and cities retaining their unique characteristics. To undercut them, by selectively deciding what laws to enforce and what laws to ignore, is simply outrageous.
Importantly, we are not discussing any new "Internet taxes." I am simply urging the state taxing authorities to enforce the tax laws already in place.
Thank you for your consideration.
[NAME, STORE NAME & ADDRESS]