LETTERS

Kudos for SSUTA story

Regarding the article “SSUTA: much ado about little” (August issue), I tip my hat to writer John Fischer for addressing a complex topic. The Streamlined Sales Tax Project (SSTP), which was scheduled to go into effect last month, was initiated in response to Quill v. North Dakota with the goal of making compliance more simple and straightforward.

The agencies behind the SSTP created Certified Service Providers (CSPs) — state-retained commercial companies. A handful of companies, (including my firm, Exactor) will be paid by states to provide retailers free technology that will automate the calculating sales taxes, the filing of tax returns, and the payment of tax proceeds on behalf of the retailer.

In Quill, the Supreme Court stated that it will not enforce state sales tax rules on retailers that do not have nexus. The court stated that tax systems are so complex that it would be an undue burden to require retailers to comply with all the different rules and jurisdictions. In response, state taxing agencies banded together to draft and sign the SSTP agreement. The states hope that with this process in place, Congress will pass legislation that will expand the long-arm jurisdiction capabilities of the court system, another item raised by the Quill court.

But compliance with sales and use-tax rules does not begin and end with the SSTP. Contrary to popular belief, sales and use taxes do apply to online transactions. With looming compliance requirements (e.g., Sarbanes-Oxley) and personal liability, management needs to pay more attention to this topic and assure compliance.

Borrowing from the old adage, “Seller beware.”
Jonathan Barsade
CEO, Exactor

Paid-search article clicks

I read Tim Daly's article on fee structures for SEM agencies (“Paying for clicks,” September) with great interest. Daly points out the limitations of cost-per-action (CPA) compensation. We've seen this method take the form of a “revenue share,” which sounds appealing to retailers but has unintended effects: The agency has no incentive to let its client know the margin it's earning per click, so it becomes a competitor.

Daly is on target that percent of ad spend is the most retailer-friendly method for SEM agency compensation. But we suggest a maximum cap on the monthly fee, so that when a retailer's ad spend doubles at the holidays, its payment to the agency doesn't double as well. Compensation should reflect the agency's effort and resulting value, not external phenomena such as Christmas or a peak season.
Lawrence Becker
vice president, marketing and business development
The Rimm-Kaufman Group

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