September 25, 2012
By Dawn Kent -- The Birmingham News
Gov. Robert Bentley supports federal legislation that would allow states to compel online retailers to collect sales tax from buyers. (The Birmingham News)
BIRMINGHAM, Alabama -- Gov. Robert Bentley today urged Alabama retailers to lobby the state's congressional delegation for their support of federal legislation that would allow states to compel online retailers to collect sales tax from buyers.
Bentley was part of a panel discussion at today's Retail Day, an annual event at The Club sponsored by the Alabama Retail Association and the University of Alabama at Birmingham.
The governor supports the federal legislation and has met with the state's delegation about the measures. The Senate bill is called the Marketplace Fairness Act; the House version, the Marketplace Equity Act, is similar.
"This is a tax that's already owed. It's not a new tax," Bentley said.
The issue is a growing sore spot for brick and mortar retailers, particularly small businesses that say there's not a level playing field when it comes to competing with out-of-state online retailers who aren't compelled to pay the taxes like they are.
"Showrooming" also is a problem, they say. That's when shoppers visit a store to examine products, learn more about them from the sales staff, then go buy them tax-free online.
Online sellers who have a nexus -- a link or connection through retail or other operations -- in a state do collect and remit online sales tax, but retailers that have no physical presence in a state cannot be required to do so, the U.S. Supreme Court ruled in 1992.
However, the court did not exempt buyers from the obligation to pay taxes to their state for online purchases.
But many people either don't know that they owe the taxes or deliberately avoid paying them.
A recent UAB study shows uncollected sales and use tax from online purchases in Alabama will help tally more than $1 billion during the next five years unless new legislation prevents it. There's also the potential for up to 4,000 new job losses per year, the study says, since the loss of sales at retailers in the state stunts employment growth.
Alabama Senate President Pro Tem Del Marsh, R-Anniston, also sat on this morning's panel. He said the tax must be collected at the point of sale through a structure devised by the federal government.
"If you think this is a problem now, wait until the next generation gets into full buying power," he said.
Echoing Bentley, Marsh said this isn't about new taxes.
"It's a fairness issue," he said.
Another panelist, Jason Brewer of the Retail Industry Leaders Association, said the federal legislation has bi-partisan support and he expects either President Obama or Republican presidential candidate Mitt Romney to sign it, depending on the outcome of the November election.
At the earliest, Brewer said, Congress could act on the bills after the election, in November or December.
"I do think there's been a sea change in the perception of this among conservatives," he said. "We're closer than we ever have been."
Also, a number of conservative Republican governors, like Bentley, have helped educate their state delegations about the issue, Brewer added.
Bentley said he believes the hold-up in Alabama's congressional delegation has been a lack of education and a belief that their support of the legislation would be spun to say they're backing new taxes.
But they are softening, he said.
"I believe we have most of our House members on board. We need to encourage our senators to get on board. I think they're getting there. They need encouragement from local people," he said.
George Wilder also was a part of the panel. He owns the high-end men's clothing shop, The Locker Room, with locations in Montgomery and Auburn.
Wilder said brick and mortar retailers support the communities where they are located.
"Nobody's seen Amazon.com on the back of a Little League jersey," he said.
The problem is not online retailing itself, he added, but the issue of them not collecting the tax. The Locker Room does online sales and collects the taxes.
"Good retailers are not afraid of competition," Wilder said. "All we want is the same rules to apply to everyone."
For more information, visit http://commerce.alabama.gov
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