Remote-tax firewall is gradually eroding
KINDLE Fire is the high-end e-book reader offered by Amazon.com. For years, Amazon has enjoyed a virtual firewall against sales tax collections on purchases made in states where Amazon doesn't have a physical presence.
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That firewall is about to get hosed.
Recent Republican acquiescence to remote sales tax collections is good news for Main Street retailers whose tax receipts fund local fire departments and other functions of state and local government. Their mandate to collect taxes puts them at a disadvantage against Amazon and other Internet warehouse operations. The disparity has also turned retailers into free showrooms for customers who “shop” in a store but buy online.
Republican resistance to remote sales tax collection is rooted in the belief that support for any measure that appears to raises taxes is politically dangerous. On the other hand, Republican governors see the need for increased sales tax receipts collected by remote retailers rather than paid voluntarily by consumers.
This honor system is what Oklahoma uses to collect sales taxes that are due from consumers but not actually collected by vendors. Amazon, which has no physical presence in the state, attracts buyers seeking a price advantage over goods bought from a retailer such as Dillard's or Best Buy, which have stores here.
Main Street retailers in Oklahoma got a cool reception last year from the state's congressional delegation to the retailers' support of federal legislation to compel state and local sales tax collections. Although a softening of the GOP stance against remote sales tax collection is being seen in the offices of governors and legislators, members of Congress will ultimately determine the fate of pending bills.
At stake is an estimated $22 billion or more of sales tax receipts. The Wall Street Journal reported last week that New Jersey's Chris Christie is among the Republican governors who've modified their resistance to tax law changes. For Christie, it means jobs: Amazon plans to put distribution centers in his state. The state of Texas recently ironed out differences with Amazon that also involved job creation.