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Lack of online sales tax hurts local businesses
[December 03, 2010]

Lack of online sales tax hurts local businesses

Dec 03, 2010 (The Bradenton Herald - McClatchy-Tribune Information Services via COMTEX) -- BRADENTON Paul Tobio is thankful some of the major bicycle brands his Bradenton shop carries can't be sold online.

For the most part, big name manufacturers in the cycling industry don't allow retailers to sell their products online.

Tobio, owner of Ryder Bikes in Bradenton, says without such policies his store could stand to lose big business to out-of-state online merchants who aren't required to collect sales tax if they don't have a physical shop in Florida.

"Luckily, they give us that protection," Tobio says.

Many bricks-and-mortar stores, however, are losing out on sales to online retailers due to an Internet sales tax loophole, say retail trade associations. Currently, there's no federal policy that requires businesses to collect sales taxes on out-of-state purchases. The National Retail Federation estimates that state and local governments may lose at least $23.2 billion in unpaid sales and use taxes from remote purchases.

The Florida Retail Federation estimates it loses about $1.5 billion annually.

"We've been working for over 10 years to level the playing field for collection responsibilities," said Maureen Riehl, vice president government and industry relations counsel at the National Retail Federation. "Retailers that build stores are easy to find and required to collect sales tax. We want that same responsibility to extend to catalog and online merchants because that's the wave of the new economy." Since 1992, catalog companies and online retailers have been following a U.S. Supreme Court decision that mandated remote retailers are only required to collect sales taxes from out-of-state consumers if the retailer has a physical store, warehouse or office in the purchaser's state.

Retail trade groups say that policy is outdated given new shopping trends in which online mega stores with no physical address such as and exist. Not to mention, online retailers raked in more than $1 billion in sales on Cyber Monday this year, the virtual version of Black Friday held the first Monday after Thanksgiving.

In an attempt to correct what the National Retail Federation sees as unfair competition, the trade association next year plans to introduce in Congress a revised version of the Main Street Fairness Act. H.R. 5660 which would give states the authority to require all remote businesses to collect sales taxes on remote sales.

Ron Pierro, owner of Pierro's Jewelers in Bradenton, said he would welcome such a change.

"We have to collect it so I don't know why anybody else wouldn't have to," Pierro said. "I'm sure it's an incentive for people to shop online. It's only fair to make them collect, too." The Florida Department of Revenue has been recovering what sales taxes are owed to the state from remote purchases by enforcing use tax collections. The state on its website has asked consumers to be forthcoming about their sales-tax-free purchases made from an out-of-state online merchant and submit an out-of-state purchase return form with a payment.

That effort helped the Florida Department of Revenue collected $7.56 million in self-reported taxes for fiscal year 2009-10.

But the department's annual compliance campaigns among large consumer groups have helped recover millions more in owed sales taxes.

The campaigns utilize data from U.S. Customs to monitor purchases among industries such as hotels, auto dealers and golf courses that typically purchase equipment and supplies used in business.

From July through November, Florida had collected $18.6 million in taxes and $30 million in 2009.

"The laws of the country have to change in order to make it fair for those retailers that are in the state of Florida," said Randy Miller, who is executive vice president of Florida Retail Federation.

"The way it works now is someone looking for a fishing rod goes to a sporting goods store, looks at it, handles it, says, 'this is exactly what I want.' They get the model number and then go and order it over the Internet. Now is that fair?" Frank Perry, retail sales manager at Keeton's Office & Art Supply in Bradenton, doesn't think so.

"We may be losing larger ticket item sales as a result," Perry said. "If we're not collecting sales tax, we're not passing that off to the state of Florida, and the school system and local government programs can be jeopardized." To see more of The Bradenton Herald or to subscribe to the newspaper, go to Copyright (c) 2010, The Bradenton Herald, Fla.

Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit

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