State House Sound Bites

Capitol reporter Mary Wilson covers Pennsylvania politics and issues at the Pennsylvania state capitol.

Merchants to Congress: How about e-Fairness?

Written by Mary Wilson, Capitol Bureau Chief | Jul 18, 2013 9:00 PM

Photo by Mary Wilson / witf

Brick-and-mortar store owners across Pennsylvania are trying to put pressure on Congress to make online retailers collect state sales tax.

Right now, such vendors don't have to collect sales tax from out-of-state purchases, and many customers are unaware they're required to report the tax on their own.

Pennsylvania-based retailers say it's a loophole that gives online-only vendors an unfair advantage, allowing them to undercut prices at brick-and-mortar stores.

The lucky businesses have survived. They may even see a lot of foot traffic. But many of those customers are doing what the Pennsylvania chapter of the Alliance for Main Street Fairness calls "showrooming." phenomenon: customers walk in, look around, get a price. Then?

"Leave, and go and buy it online," said spokesman Dan Hayward. "All we're asking for is that that is no longer a government-sanctioned tax advantage for those online-only retailers."

eBay is mobilizing its sellers to oppose federal legislation pending in the U.S. House. The online shopping site says requiring small businesses to collect and pay sales taxes nationwide is too much of a burden. But Hayward counters those claims are overblown.

Greg Rozman, owner of Rozman Brothers Inc. store in Harrisburg, said pushing the online sales tax issue isn't about helping small business stand up to big business. He's holding his own with stores that sell what he does: TVs, appliances, furniture. What frustrates him is the fact that some businesses are selling online and avoiding state taxes, while other businesses have to pay, and charge higher prices as a result.

"We're not as affected, I think the appliance business," said Rozman. He said his customers are looking for an appliance, as well as a no-fuss delivery and installation. Other businesses aren't in the same boat. In his travels to D.C. to advocate for an online sales tax bill, he's met a musical instrument store owner. "Everything he sells, other than baby grand pianos, can be shipped online, at a low expense," said Rozman. "A trumpet, a violin - these are lightweight things, that sell for thousands of dollars and can [be sent] online."


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Comments: 1

  • Anonymous img 2013-07-20 09:05

    Proponents of this bill say it will be easy. REALLY? Have they ever tried to integrate tax software into a customized shopping cart? LOL!! Even if we take them at their word "only one state tax rate" and "perfect running software to calculate", HOW DO PAYMENTS GET REMITTED to all 46 states? Do we write 46 monthly checks? Fill out 46 separate monthly sales tax returns?


    Not all small merchants are order automated and to input additional information by hand is both time consuming and interferes with normal business operations. What about audit risk? Can the tax board in Tennessee come after a merchant in Florida? Is it moral to burden an out of state merchant to collect taxes on behalf of a state they don't live or work or vote in? Why not ask China or Mexico to collect Tennessee taxes? Is this constitutional? Will surely be challenged in the courts, but why this legislation is truly harmful is that in such a weak recovery (check labor participation rate, wage growth, hours worked, etc.) you are burdening the very small businesses that are one of the only sources of growth in our economy. Hiring in this sector will freeze or decline and companies that are mobile and of large enough scale will simply move offshore. Our tax code is already written in a manner that encourages large companies to domicile offshore, this legislation encourages the medium and even portable smaller sized USA businesses to join them in order to compete with websites that won't have to collect this tax in the Caribbean, Mexico, Canada, etc.

    The tax revenue collected will come right out of the pockets of the average American family and the extra $$$ our citizens will have to pay means LESS money in their pockets to spend locally.
    In terms of "Fairness", there is zero entry barrier for any brick and mortar retailer to sell their products online.

    HOW ABOUT AN OPT OUT OPTION? We agree not to ship to states that want us to collect sales tax and then we are not forced to multiple file and take the audit risk?

    One million dollars of revenue does not make you a big a 5% profit (small margins are common online) you are making a whopping $50K of gross profit annually......this will ensnare and burden a TON of small businesses if passed in its current configuration.

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