What impact will the pending Marketplace Fairness Act have on direct-to-customer merchants?
Though the U.S. Senate approved the Marketplace Fairness Act in April, no two IRCE 2013 attendees interviewed by Multichannel Merchant seemed to have the same opinion about the pending legislation.
Daryl Logullo, director of ecommerce for Kellyco Metal Detectors said that the Marketplace Fairness Act is going to face a big challenge especially when it gets to the House of Representatives.
“Some people would argue that it is unconstitutional because it’s a tax issue across multiple states,” said Logullo.
Logullo said he thought it would over-complicate things for retailers online, creating mass chaos and confusion.
“I’d be surprised if it does get through and becomes law,” said Logullo.
Logullo said if it does go into effect, it’s going to ask retailers to take a hard look at their pricing structure. He added that constitutionally, the Marketplace Fairness Act is questionable.
“We’re kind of waiting to see what happens,” said Logullo.
Eric Castellucci, online marketing manager for WrigleyvilleSports.com, said his company is in the middle of where they stand on the Marketplace Fairness Act.
He said customers like it a lot better when it’s a little cheaper for them. He said overall it won’t be too big a change for his company. Castellucci didn’t think it would be too big a shock for them, but it would be nice not to have to implement the changes as a result of the Marketplace Fairness Act.
According to Brad Wolansky, president of consumer direct and CMO of Yankee Candle said during a video interview at IRCE, since they have 550 stores they are in most states in the nation, they are already collecting sales tax.
“One of the key pillars in this debate is this idea it would be so different to collect sales tax,” said Wolansky. “It would be such a burden for people to collect sales tax, I think that is still the issue especially for smaller retailers, but I think it has gotten easier over time because there are definitely software vendors that do this.”
Wolansky said people are looking at the challenge from the taxing authorities since under this new legislation they are going to have to spend more money keeping up.
“We were already collecting sales tax online, we’re already dealing with the taxing authorities. “I’ve seen it coming a long time – this is going to level the playing field for good or for bad, that the way it is,” said Wolansky.
Shopatron founder and CEO Ed Stevens said the Marketplace Fairness Act is definitely all about leveling the playing field between the retailers who are just shipping into a state versus operating in the state.
“What this boils down to is the governments need money and [the] governments need money they can cut spending and they can raise taxes,” said Stevens. “In this particular case, this is a tax that is already on the books it is just not corrected efficiently.”
Stevens said the Marketplace Place Fairness Act is just about collecting a tax that is already on the books and it definitely beneficial for Shopatron’s business. It is beneficial for all brick-and-mortars.
“I think [Marketplace Fairness Act] is going to steadily change the flow back to more multichannel and less pure play retail,” said Stevens.
The proposed legislation calls for online sellers who sell less than a million dollars annually would be exempt from collection requirements. Stevens was asked whether only small merchants should be accountable for the million dollar threshold or should the threshold be for all merchants.
Stevens said he was not opposed to the threshold for simplicity sake for small businesses.
“At one time I ran a really small business. I’d actually like to see that threshold as low as possible, but if that is what it takes to get a compromise through, I’m okay with compromise,” said Stevens.
Stevens said his personal position is that everybody should pay the collection requirements. He said he is personally okay with working with both sides of an issue to find a solution that is better than polarization and the governments going bankrupt.