Michigan Governor Supports Sales Tax Fairness

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Support for a federal solution to sales tax fairness continues to grow. In a letter to the U.S. Senate dated May 9, Michigan Governor Rick Snyder (R) publicly announced his support for the Marketplace Fairness Act (S. 1832). This legislation would give states the right to require remote retailers to collect and remit sales tax in the state if they do more than $500,000 in remote sales nationally, and it would also provide congressional authorization for the Streamlined Sales and Use Tax Agreement.

In the letter, Gov. Snyder wrote:  “Brick-and-mortar retailers throughout the state are currently required to collect sales taxes at the point of sale. By enabling remote sellers to ignore the collection of sales and use taxes, it provides them an unfair competitive advantage and threatens the viability of retailers throughout our communities, many of which are locally-owned small businesses that reflect the unique character and culture of the Great Lakes State.”

“On behalf of our Michigan member booksellers, we applaud Gov. Synder for his stance on sales tax fairness,” said ABA CEO Oren Teicher. “We completely agree with the governor that the current inequity is threatening communities throughout the state and provides remote retailers with an unfair advantage. Our independent bookstore members have dealt with this inequity for more than a decade now. Something must be done to level the playing field.”­

James P. Hallan, president and CEO of the Michigan Retailers Association, said in a statement: “Gov. Snyder understands the unfairness and economic damage caused by the current tax loophole, and we applaud him for standing up on behalf of local job makers. The Marketplace Fairness Act in Washington and the Michigan Main Street Fairness Act being considered in Lansing are a partnership for reform that is needed right now because small businesses are put at a significant competitive disadvantage that threatens Michigan jobs.”

The Michigan Main Street Fairness Act, introduced by Representatives Eileen Kowall (R - White Lake Township) and Jim Ananich (D - Flint), is bipartisan legislative that would ensure that both online and Michigan bricks-and-mortar retailers both operate under the same sales tax collection laws. The legislation would expand the definition of “nexus” or “physical presence” to include retailers that conduct business through affiliate businesses in Michigan or that own subsidiary companies in an attempt to avoid paying sales tax. (For a previous BTW article on the Michigan Main Street Fairness Act, click here.)

ABA’ s Teicher called on booksellers to contact Gov. Snyder to thank him for his support of federal sales tax fairness legislation and to express their support for the state sales tax fairness legislation currently under consideration. To make it easier for booksellers, ABA has created a template letter (below) that booksellers can adapt and send to the Governor or reference for talking points for their phone call.

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Dear Governor Snyder:

As an independent bookstore in [CITY], I wish to thank you for your public support of sales tax fairness. For too long, stores like mine have had to compete at an unfair disadvantage compared to out-of-state online retailers that are skirting their obligation to collect and remit sales tax. Your support of the federal Marketplace Fairness Act (S. 1832) is important and could go a long toward securing sales tax fairness for businesses like mine across the country.

In addition, I also support a bill currently under consideration in the state Congress, the Michigan Main Street Fairness Act. It is crucial that something be done sooner rather than later to level the playing field for retailers like mine. While a federal solution does have momentum, it is still unclear when Congress will finally act on sales tax fairness.

In the meantime, Main Street retailers cannot wait any longer. Ultimately, a federal solution will be best, but until that happens, we hope you will also throw your support behind the bipartisan Michigan Main Street Fairness Act.

Sincerely,