Small-business owners push for collection of internet sales tax

Posted Tuesday, Sep. 03, 2013  comments  Print Reprints

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Arlington Camera owner Bill Porter said his employees sometimes spend an hour helping customers choose thousands of dollars worth of camera gear — only to lose that sale to an out-of-state online retailer that isn’t required to collect sales taxes on that purchase.

Recently, Porter said, a would-be customer chose not to purchase a $2,700 Nikon lens in the store because he realized he could save more than $200 in sales tax by buying it online.

That’s why Arlington Camera and other small-business owners are throwing their support behind proposed federal legislation that could help them compete with online retailers and bring millions in additional revenue to cities and states.

The Marketplace Fairness Act, currently in the House Judiciary Committee, would allow states including Texas to collect sales and use taxes from online businesses that make $1 million or more in revenue from out-of-state customers.

“The act is not simply about taxes. It’s also about saving the bricks and mortar businesses across America,” Porter said at a news conference at his north Arlington store Tuesday. “Every day our store loses at least one sale to an out-of-state competitor because of a tax issue and the situation is only worsening.”

Reps. Joe Barton, R-Arlington, and Marc Veasey, D-Fort Worth, are co-sponsors of the bipartisan bill.

“Nobody likes taxes … but it’s part of modern society,” Barton said. “We have government and we have to fund government with some taxes. This is not a new tax. But this does allow for the collection of an existing tax and in a sales tax city and a sales tax state, that is important.”

‘Equal playing field’

According to a National League of Cities survey, Texas could have brought in $870 million more in sales taxes by taxing out-of-state online purchases.

“Without an equal playing field, it’s almost impossible for small businesses to compete with online retailers that don’t require individuals to pay sales taxes,” Veasey said. “We need a national law that all retailers have to follow.”

Arlington could have brought in an extra $3 million in sales taxes, the survey found. Arlington Camera, for example, collected $92,900 in taxable sales last year for the city but was not required to collect $28,150 in sales taxes on online transactions made by customers out of state.

“When you multiply those figures all across the state and all across the nation, you can imagine the amount of tax dollars floating around there that is not getting collected,” Porter said.

Mayor Robert Cluck, Councilman Jimmy Bennett and other city leaders support the legislation to help save small businesses.

“You’ll find nothing more important to us than making sure this bill goes through, making sure the small businesses in Arlington have a fair chance at everything they do,” Cluck said. “Without some fairness I’m afraid we are going to see some small business going down. That is the last thing we need to have. This is a No. 1 priority for us.”

Uncollected taxes

Some groups, including Americans for Tax Reform, oppose the legislation. Critics say that retailers would have to spend money on software and training to collect at appropriate tax rates for each state and that the law could mean the risk of a business being audited by numerous states.

Bennett, who is also a certified public accountant, said many Texans are unaware they are already required to remit a “use tax” to the state comptroller on their out-of-state online purchases if a sales tax was not collected by the vendor and the item purchased is used in Texas.

“Most consumers in the country do not realize their current obligation to pay sales and use taxes on their online purchases today. Right now it goes almost entirely uncollected,” Bennett said.

Susan Schrock, 817-390-7639 Twitter: @susanschrock

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