Big brick-and-mortar retailers like Walmart and Target have locations in every state and already pay taxes there, so they will cheer on the anticipated passage of the Marketplace Fairness Act by the United States Senate next week. Specialty catalog sellers and e-commerce sites, many of them small operations, feel that the administrative burden of paying state taxes could threaten their survival. While the National Retail Federation and the Retail Industry Leaders Association have been lobbying the issue for years on behalf of the big chains, catalogers have been unduly quiet on the issue. That changes next week with an emergency “fly-in” to get their message before key members of the House of Representatives who can derail the bill.
“The other side has been putting tens of millions of dollars behind the effort to pass this bill for years. But, to be perfectly frank, most catalog companies have just ignored this,” says Hamilton Davison, president and executive director of the American Catalog Mailers Association. “The tax provisions in this bill are not doable for SMBs. We in the catalog industry are going to ignore this at our own peril.”
Davison and his board took the occasion of the group’s National Catalog Forum kicking off in Washington next Wednesday to recruit members to fly in a day early and express their displeasure over the bill to members of the House Judiciary and Oversight & Government Reform committees. While the bill contains provisions that state governments must simplify their tax codes for out-of-state collection, the ACMA’s position is that the bill as written would tip the scales in the favor of the big retailers.
“If you are a retailer doing business in a state, you have an address there, you are a citizen. If you have a problem, you can ask for redress in a local court,” Davison explains. “But if you are cataloger that is out of state and you have an unfair tax judgment, you have to ask the state tax commissioner to overturn it. How likely is that? This is taxation without representation.”
Davison also decries the lack of education about the bill provided to consumers, few of whom are in favor of paying more for the merchandise they buy. But beyond that, he feels this bill discriminates against certain consumer segments, such as rural residents and mature Americans who are not regular website shoppers. “You have catalogers who do 30% of their business with people who send checks and order forms in the mail,” he says. “It’s going to be very difficult for these companies to do all the accounting.”
Members of Congress could also use some education on the bill, Davison maintains. “Nineteen of the top 20 internet sellers are already collecting taxes in 46 states. Passing this bill will generate less than one-half of one percent in tax revenue to the states,” he says. “Sadly, the rush to vote on this means not all Senators are fully cognizant of the impact of what they are voting into law.”
Davison says there is still time for catalogers to join Tuesday’s invasion of the House. Arrangements for the fly-in were hastily made this week and more than 20 were signed up at presstime. Majority Leader Harry Reid (D-NV) announced that he expects a vote on the bill in the Senate by Monday afternoon.
