Small Retailers Address Need for Marketplace Fairness Act

Sep 18, 2013 12:57 PM  By

The National Retail Federation has released a short video featuring small retailers from across the country expressing the online disparity between Main Street retailers and internet retailers, along with the “urgent” need for Congress to address the Marketplace Fairness Act.

The video was released in conjunction with of the House Judiciary Committee’s basic principles pertaining to the internet sales tax. The principles are intended to guide discussion on this issue and spark creative solutions.

“We are losing the face of retail on Main Street,” said Erin Calvo-Bacci, owner of Bacci Chocolate Design and The Chocolate Truffler, in the video.

Owner and CEO of Pieratt’s Appliances, Television, Bedding and Furniture, Bruce Pieratt said in the video that his store is at a “six percent [tax] disadvantage to internet sellers who don’t have a brick and mortar presence.” Pieratt was referring to the fact that currently if an online retailer sells a product in a state where it does not have a physical nexus, they are not required to collect tax, but the buyer is expected to claim the tax on their annual tax return – a rule that almost no one follows.

Andrew Brewer, owner of Onion River Sports, said in the video that smaller business should not expect a major overhaul of their business to comply with the act if it’s passed. “I do not think it will be difficult. My little business, I bet you I could, I can go inside my system and change codes and toggle switches to start collecting the different sales taxes and it won’t take me half a day.”

 

 

  • JOE LAZER

    Good to see how marketplace fairness act is taking shape. Came across another interesting whitepaper on the online sales tax that readers will find very interesting as it offers good advice for retailers on strategies that will ensure they retain a competitive edge http://mcgladrey.com/State-and-Local-Tax/The-Marketplace-Fairness-Act-Five-proactive-strategies-remote-sellers-should-consider-now

  • Marcia Davison

    I don’t think Mr. Pieratt’s comment, that “his store is at a ‘ six percent [tax] disadvantage to internet sellers who don’t have a brick and mortar presence,’ ” is valid. Internet and catalog retailers have to eat shipping charges to meet the expectations of bargain driven internet consumers, which are very often considerably more than six percent, Retail giants on the internet have trained customers to expect free or bargain shipping rates and small businesses have to follow suit or lose their customers.

    • Susan Lindsey

      Very hard for smaller online sellers to have a six percent advantage when shipping, insurance, packing costs, handling (and also taking pictures and listing on Internet) adds more than 10%.

      Now if Mr. Pieratt is talking about the big box retailers that dominate 90% of Internet sales and already pay sales tax, I would say they have at least a10 to 15% advantage.

  • Theresa Groskopp

    While states will need to provide software to manage collecting and submitting tax for individual states, which shopping carts/ecommerce platforms & which back-end order management systems will that software integrate with? For the small retailer without a developer on staff to integrate it, they will need to find/pay someone to do this. Who knows how long that will take?

    • http://www.undertherainbow.us Ralyn Speerly Schraceo

      Or how much. I do web design and when I need help with programming it costs me a minimum of $40/hr to get help. I’d most likely have to re-do my site. The bigger point here is that they are claiming we don’t pay sales tax – that’s an outright lie. We most certainly do pay sales tax for sales made in our own state, same as the brick & mortar do…

  • Susan Lindsey

    The biggest reason why small local businesses are losing businesses is because the big box retailers dominate 90% of Internet sales and already pay sales tax. With physical presence all over the country, they won’t be affected. So it’s incorrect to state that, “Most don’t realize that they have to pay sales taxes.” Most do. The problem is that taxpayers have subsidized bit retail growth in local communities and the MFA as written would create more of the same, all of which would hurt smaller business of all types.

    For those whom would be affected by the MFA as it’s currently written, less than 1/3 of 1% of retail would be encumbered with a harmful tax collection process.

    The National Retail Federation is creating astroturf – the illusion that the MFA would help local businesses. It’s really working to advance to interests of big business!

    By the time you add shipping costs, insurance costs, tracking, insurance filings to deal with lost of damaged merchandise, packing time, time restrictions created by listing merchandise to the Internet. We’re dealing with different business models.

    Although a different selling model, smaller online businesses are main street tool. We pay state taxes, are on school boards, buy locally, employ local, and are totally immersed with the community in other ways. By the way, more than 50% of local smaller businesses are brick n click.

    Reliable & valid survey’s show that shoppers only factor in lack of sales tax in 3% of times. That’s why they buy so much from the big retailers online. http://blog.shopperapproved.com/why-customers-shop-online/

    Given the difference in business models for small online sellers, the MFA would really hurt small online business: http://www.courant.com/news/opinion/hc-op-alpert-fair-market-bill-bad-effests-0915-20130913,0,226006.story

    Small businesses that mutl-channel (sell on Amazon, eBay, etsy, Rubby Lane, Over stock, etc) would be particularly be hurt.

    http://www.ecommercebytes.com/cab/abn/y13/m09/i17/s03

    The real leveling field needs to occur between small retail and the big box retailers.

    http://marketplacefairnesscoalition.org/hypocritical-marketplace-fairness-act-proponent-examples-are-rampant/

    http://www.youtube.com/watch?v=VO5bwDVq7Is&feature=youtu.be

    http://netchoice.org/chairman-goodlattes-principles-stop-durbins-internet-sales-tax-from-taking-us-over-the-cliff/#more-8798

    We support a solution if Goodlatte’s 7 principles are honored. The AAA-CPA that has been against the MFA, offers a simple, viable solution that won’t hurt anyone. As long as the buyers personal identity is protected, this could be the solution. It’s fair, applies to all use tax violations, and it could offer the perfect solution:

    http://www.floridasalestax.com/documents/AAA-CPA-Position-Letter-Against-Marketplace-Fairness-Act.pdf

  • Susan Lindsey

    By the way, could someone please tell us who is running “My Disqus.” Could we be given the names of individuals and the names of businesses?

  • Rick

    A number of these businesses sell online. Hypocritical? Are they below the small business exemption and want to foist audit and compliance costs on some of their competitors?

    And a very recent poll from just yesterday showed on 3 out of 10,000 retail purchases are made to avoid sales tax. Selection, pricing and convenience were the primary drivers to buy online.

  • Keith Yockey

    So many questions from the B&Ms in the video, yet never bothered to research FACTS.

    That $400 item they sell? I can find it for $350 online, or while shopping (showrooming) find a better deal @ COSTCO or SAMS WAREHOUSE. They have better selection, warranty and prices than a typical B&M … or maybe I might find the item I need from a chain store across the street.

    Check out this survey. It shows that only 3% of shoppers think of sales tax in the purchase:
    http://blog.shopperapproved.com/why-customers-shop-online/

    B&Ms would rather blame the internet than a poor sales staff, lack of selection, or the Big Box stores next door that steal 30% of their business.

    And the commenter that said he could re-program his software in 30 minutes never read the legislation, nor knows the complexity of Sales Tax for over 600 ‘States’ as passed by the Senate (S743).

  • taek

    Well of course National Retail Federation wants the Act to be passed. After all, one of its biggest member, Walmart, is the biggest lobbyist of the Act. One has to wonder whether NRF truly speaks for the little, mom-and-pop stores, or for the retail giants?

    While it may be easy for the owner of Onion River Sports to say that it only takes a few “toggle switches” to start collecting different sales tax for online seller, the biggest questions are “how do you address the differences in tax categories among 45 states, i.e. one state may say Kit Kat is a candy under X category while another state say Kit Kat is a snack under Y category?”

    Question number 2, “How does an online seller comply to audit request from all 45 states + DC + Puerto Rico + Virgin Island + hundred of sovereign Indian tribes?” After all, each jurisdiction will want to make sure that online sellers remit the correct tax.

  • Train ER

    Wow. The comment by Andrew Brewer is unreal. He said:
    “I do not think it will be difficult. My little business, I bet you I could, I can go inside my system and change codes and toggle switches to start collecting the different sales taxes and it won’t take me half a day.”

    I’m curious what “switches” does he plan to “toggle”? Some clarification is necessary.

    What Mr. Brewer thinks and the facts are quite different – in fact they are polar opposites. He is not a software developer. He is not being asked to incur the costs and burdens and has not priced it out or even looked at the requirements for the API. I have. The fact is, this is a complex integration with various integration points. The costs for many small businesses will be tens of thousands of dollars. For some it will cost over 70,000 dollars.

    What Mr. Brewer “thinks” ultimately does not matter. Facts matter. And the facts clearly show that he is dead wrong.