Last year, CCIA consistently opposed efforts to pass
legislation that would force online retailers to collect sales and use taxes
regardless of physical presence.
Last month, we opposed an attempt in the lame duck session to attach
such a bill to the defense authorization bill. In light of such back door efforts, as well as the stated
determination by proponents in Congress to continue to push for legislation in
the new Congress, we remain vigilant against any further attempts to
misleadingly frame the issue as one of fairness and leveling the playing
field. One Reuters
article in the aftermath of the holiday shopping season caused us concern
by seeming to conflate Amazon.com, which is a retailer with both physical and
online operations (“click and mortar”), and Internet retailers with no physical
presence.
The article quotes an analysis by ChannelAdvisor comparing
its clients’ sales on Amazon.com in California, where Amazon began collecting
sales tax in September, to other states before and after the sales tax
collection started. However,
Amazon is described as “the world’s biggest Internet retailer,” and results
showing sales on Amazon dropping in states where it collected sales tax
compared to other states seem to be depicted as evidence that tax collection
“levels the playing field for brick-and-mortar stores.” This characterization of Amazon as a
typical Internet retailer in contrast to brick-and-mortar stores is so
inaccurate as to miss the entire point of the 1992 Quill decision, which was
based on physical presence.
Amazon’s decision to collect sales taxes in certain states
has come as it has increased its physical presence in order to reduce delivery
times. “It has looked at its own plans
for growth and the need to have distribution centers in many states to continue
that trajectory.” To
contrast Amazon to Best Buy, both of which combine online sales and physical
facilities, is no contrast at all.
CCIA’s opposition to online sales tax collection is based on the need to
maintain the relationship between taxes and physical presence, and the need to
avoid penalizing small innovative Internet retailers with tax collection
burdens. Articles like this one
can make the case that giant click-and-mortar retailers like Amazon and Best
Buy should collect taxes in the same way.
However, this argument cannot be extrapolated to smaller Internet
retailers with no physical presence in states. This distinction is crucial in avoiding the fallacy of
framing this issue as one of equity/fairness/leveling the playing field.
