Officials, business owners look to Congress to require Web merchants to collect sales tax
Some local officials and business owners want Congress to renew efforts to require online retailers to collect sales tax.
North Elba town Supervisor Roby Politi raised the Internet sales tax issue during a recent meeting with U.S. Rep. Bill Owens, D-Plattsburgh, at the Conference Center at Lake Placid.
“There is a potential revenue source from these Internet companies that are operating that don’t pay sales tax,” Politi told the congressman. “I would think there’s a potential opportunity on the federal side and the state side for generating revenues from these companies that are operating on the Internet, that compete against the local businesses, that have a tremendous advantage over local businesses. Like everything else, it’s kind of out there and untouched.”
Essex County Treasurer Mike Diskin, who is also president-elect of the National Association of County Collectors, Treasurers and Finance Officers, told the Enterprise that billions of dollars in sales tax revenue is being lost nationally to Internet companies.
“Any number of studies will tell you,” he said. “It gives them an unfair advantage over local businesses.”
Diskin explained that some big online retailers – like Amazon – already collect sales tax in New York state. He noted that legislation introduced in the House and Senate in 2011 aimed to give states the authority to collect sales tax from more Internet companies.
“The problem was nothing ever happened to them, so they died with the 112th Congress,” he said. “Now they have to be introduced.”
The Senate bill – the Marketplace Fairness Act – would have given states “the ability to enforce their existing sales and use tax laws and to treat similar sales transactions equally, without regard to the manner in which the sale is transacted, and the right to collect – or decide not to collect – taxes that are already owed under State law.” The bill included an exemption for businesses grossing less than $500,000 per year.
The House version of the bill was called the Marketplace Equity Act and would have exempted online retailers grossing less than $1 million annually.
Mike Beglin owns Beglin’s Lake Placid Jewelers. Speaking at the recent roundtable with Owens, he said he has to keep track of the sales tax as he ships items around the state.
“I’m just a mom-and-pop,” Beglin said. “A community is built on the brick and mortar of what’s in that community. … Not forcing these mail-order companies to pay sales tax actually is gutting, in a roundabout way, what the ideal dream for an American community is. It’s easily found money because everybody is used to paying sales tax.
“If you think this is going to put a mail-order catalog company out of business by collecting (sales tax), it absolutely won’t. But it will put us out of business because it’s much more convenient for them to do it on the Internet.”
The state currently collects a 4 percent sales tax, and many counties collect between 3 and 4 percent.
Beglin said forcing Internet retailers to collect sales tax would have a positive impact on the local economy.
“It’s such a simple way to increase income for local communities, because that’s where the money goes right to,” he said.
But Diskin said it’s not quite that simple.
“The problem New York has with this is, both of these acts in Congress said that there would have to be a unified tax rate,” Diskin said. “In other words, counties in New York state are already all over the place with the percentage of sales tax they collect.
“These bills were saying that the state, in order to do this, would have to establish a unified tax rate across all counties so that company X, Y or Z that was doing Internet sales wouldn’t have to know that Essex County was 7.75, Warren (County) was 7, Clinton (County) was 8 – they would have to set a rate that’s the same for everybody.”
Diskin said some New York lawmakers were concerned that a unified tax rate might cause some counties to lose, rather than gain, revenue. For example, if the state instituted an across-the-board sales tax rate of 7 percent, Essex County would lose three-quarters of a percent.
“New York is a little shy on supporting these bills the way they read,” Diskin said. “They would prefer that the Internet companies be required to pay whatever county tax there is.”