JAN. 5 I PERSPECTIVE I BY ZACH PHILLIPS
The Playing Field
is Still Not Level

‘Let’s be clear: Online sales tax reformists
are not advocating a new or special tax for Internet sellers and their customers.’

It’s 2010, but you’d think it was 2005 judging from the status of Internet sales tax reform. The wheels of progress have barely turned on this issue, and in my opinion, it should’ve been fixed the moment Amazon meant anything other than a South American river (or brawny female).

It’s time to put the issue back on the table.

Music retail financial guru Alan Friedman has given his final word on this topic in “Sales Tax Demystified,” in the upcoming February issue. Not surprisingly, Friedman’s vehemently in favor of a uniform tax collection policy for all retailers, whether they’re brick and mortar, catalog or Internet.

Let’s be clear: Friedman and online sales tax reformists are not advocating a new or special tax for Internet sellers and their customers. They’re asking that online retailers carry out the same sales tax collection responsibility as brick-and-mortar retailers to make sure every consumer pays his or her rightful sales and/or use tax.

Ironically, California came close to leading the Internet sales tax reform movement, only to take a huge step backwards this past summer. California Assemblywoman Nancy Skinner proposed a bill that would require Internet retail affiliates in California to collect tax on their sales to state residents. (An affiliate is a business with a contractual agreement to advertise an online retailer and receives a commission from that retailer.)

New York had passed a similar law successfully in 2008. And in California, the bill would’ve added up to an estimated $150 million in potential sales tax revenue — this for a state with an epic budget crisis.

Sounds reasonable, right?

Amazon.com and Overstock.com weren’t having it. Both threatened to cut their California affiliates, and Gov. Arnold Schwarzenegger vetoed the bill, citing opposition to new taxes.

It would’ve flown under my radar if Frank Hayhurst, owner of Zone Music in Cotati, Calif., hadn’t spoken up. He sent an e-mail blast to the press and fellow California-based music retailers, urging them to call the governor’s office at 916-445-2841 and ask Schwarzenegger to reconsider Skinner’s bill.

“It’s time we stood up and, with one voice, put a stop to this serious inequality,” Hayhurst wrote. “There’s no way to sugarcoat the difference in our consumers’ minds. We charge 10-percent more for the same item they can get online for 10-percent less. That’s how it looks to them.

“Please take action. We’re the only ones who can change this inequality, and together, we can do what New York state did.”

Realize, this is not a knock on e-commerce. This is about states collecting taxes that are already owed to them. If you’re a California retailer and share Hayhurst’s persuasion, why not make the phone call? Everyone deserves a more level playing field. MI