Tell Congress to protect our small retailers

In 2011 the state sold out our small businesses and permitted Amazon not to collect sales tax from in-state purchases in exchange for the company building a distribution facility in Lexington County.  This allowed Amazon to continue to have an unfair competitive advantage over our small retailers.  That sales tax exemption runs out in 2016. 

But it’s not only Amazon that is not collecting state sales tax from South Carolinians making purchase online.  There are other companies doing the same and hiding behind federal law that says they don’t have to collect state sales tax if they don’t have a “presence” in the state.  They just keep on taking sales away from our small businesses because their prices are lower from not charging sales tax.

Please read the letter below and help send Congress a message to enable states to shut down this unlevel playing field that our small retailers face every day. 

Oh, and happy Valentine’s Day.
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Dear South Carolina,

Great news!  The Marketplace Fairness Act is set to be reintroduced today, February 14, in both the House and the Senate.  What a great Valentine’s Day present for hardworking small businesses.  We need to make sure Members of Congress, both new and old, know e-fairness is still an urgent priority for America’s small businesses and communities.

Please take a moment to send your Members of Congress an email urging them to ensure the Marketplace Fairness Act passes in 2013.

Inaction by Congress means online-only retailers will continue to receive a government-sanctioned tax advantage.  Our businesses, employees, and communities will pay the price.  While some states are starting to collect sales taxes from Amazon and other online retailers, only federal legislation will fully level the playing field.  

Send a message to Congress today: No more picking winners and losers.  Tell Congress to make 2013 the year all retailers are treated equally.

We’ve worked toward passage of federal e-fairness for a long time.  This is our chance to finally level the playing field for Main Street. 

We sincerely appreciate your hard work and continued support.  Please take a few minutes to reach out to your Members of Congress today.

Best,

The Alliance for Main Street Fairness

 

New Jersey shows how to deal with Amazon

One of the big fights in the state legislature last year was over Amazon’s offer to build a distribution center in Lexington County (investing $90 million) and hiring 1249 employees.  In exchange the state would not require Amazon to collect sales tax on any purchases from South Carolina customers for five years. 

The South Carolina Small Business Chamber and some other organizations fought hard against this proposal arguing that it would create an unfair competitive advantage for Amazon compared to the state’s other businesses. 

Although we lost this fight, our opposition forced Amazon to sweeten the deal by pledging to invest $125 million and create 2000 jobs.  Unfortunately, our small businesses will be harmed by Amazon’s sweetheart no-sales-tax deal. 

But our state legislators said that they would lose the economic development of Amazon if they didn’t give into its blackmail.  Our elected leaders didn’t agree with us that Amazon was not going to walk away from building the distribution center that was already under construction.

One year later, say hello to New Jersey and this headline in today’s New York Times:

Amazon to Build New Jersey Warehouses and Collect State Tax

That’s right.  New Jersey and Amazon have reached an agreement for the online retail giant to build two distribution centers (an investment of $130 million) and create 1500 new jobs.  PLUS Amazon will start collecting the state’s 7% sales tax on New Jersey customers starting July 2013 that will result in $30 to $40 million more money for that state.  (Amazon failed to get a 22 month reprieve on collecting the sales tax.)

What did New Jersey promise in return for Amazon’s investment, new jobs and sales tax collection?  The same thing that we gave Amazon—tax incentives.

The opponents to the S.C. Amazon deal have been vindicated.  But that’s little consolation for our state’s small businesses that are seeing Amazon steal their sales courtesy of our General Assembly.

Amazon’s deal re-visited

The battle over state sales tax being collected by on-line retailers like Amazon has now moved to Congress.  Amazon, which this year won a battle in South Carolina receiving a reprieve from collecting sales tax on in-state sales in exchange for building a distribution center in Lexington County, apparently has now switched sides. 

The retail giant is supporting the Marketplace Fairness Act that would strip away the Supreme Court’s Quill decision that said on-line retailers without a physical presence in a state did not have to collect sales tax on purchases in that state.  The sales tax was still owed but it was the purchaser’s responsibility to pay it directly to their state.

If the federal legislation passes, the main opponents now are eBay and Overstock.com, all on-line retailers would be obligated to collect each state’s sales tax and remit it to the proper state.  The bill would exempt retailers with on-line sales of less than $500,000.

All this is good news for the nation’s small brick and mortar businesses that are at a severe competitive disadvantage because they have to charge sales tax but on-line retailers like Amazon do not. 

But passage of the federal legislation won’t appear to help South Carolina’s small businesses until 2016 because the legislation passed this year in the state specifically carves out a sales tax collection exemption only for Amazon to the exclusion of even all other on-line retailers.  Now the constitutionality of that special deal has been called into question.

In yesterday’s issue of Tax Analysts law professors James E. Rogers and Walter Hellerstein provide a scholarly legal assessment of South Carolina’s law regarding Amazon.  They conclude that South Carolina’s law violates the Commerce Clause of the Constitution because it treats certain out-of state on-line retailers (Amazon) different from other out-of-state on-line retailers. 

So even if the Marketplace Fairness Act with its bi-partisan support eventually is enacted, the constitutionality of South Carolina’s law needs to be challenged.  Any lawyers interested?