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AZ retailers ratchet up pressure for online sales tax

Photo illustration (Gabe Turner, Arizona Capitol Times)

Arizona retailers are planning to increase the pressure on lawmakers to force online retailers to collect state sales tax.

The Arizona Retailers Association is concocting a public-relations campaign to intensify awareness and garner support for an online sales tax.

Michelle Ahlmer, executive director for the group, said that this is the retail industry’s top priority.

“It definitely is coming back up because it’s the most important issue to the retail industry. Arizona depends heavily on sales tax. It’s just going to get worse,” Ahlmer said.

The retail association has been a staunch advocate of reforming the online sales tax code and is following the issue closely. The group is only waiting for the recent governor-appointed sales tax task force to meet before it rolls out a campaign.

The Transaction Privilege Tax Simplification Task Force is set to meet on July 23 and Ahlmer says after the group sees an agenda it will begin work on a PR campaign. The task force is expected to make a recommendation about whether Arizona should establish an online sales tax.

Ahlmer said her group isn’t communicating with the Governor’s Office.

“They’ve made it very clear that they want the task force to take it on,” Ahlmer said.

In the past, measures that would have required online retailers to collect a sales tax have failed to pass.

Senate Bill 1338 would have required online retailers with a physical presence in a state, like Amazon, to charge customers a state sales tax. Yet, that bill and another similar one were voted down three times. Amazon has several distribution centers throughout the state.

This issue will be addressed in Gov. Jan Brewer’s sales tax task force, which she created in May. Michael Hunter, the governor’s special adviser on tax policy and reform, is leading the task force. Although the task force will tackle numerous issues in regards to simplifying the Arizona sales tax, an online tax will likely be a major facet of discussion.

“The premise for an effort to deal with that issue is simplifying our tax code. We have to work on some of the fundamental complexities of our system and that will make it easier to deal with … (an) online sales tax,” Hunter said.

The task force will consult with tax experts and members of local businesses. Hunter said he is not ready to name exactly who will be participating.

“There will be aggressive reform that will solidify the definition of what’s taxable and what’s not,” he said. “We’re not doing taxpayers much of a service when their efforts to comply are made difficult with a complex tax code.”

“Ultimately there will be a recommendation on this online sales tax and how to tax,” Hunter said.

The task force has not yet spoken with Amazon, but the online retailer is looking to “get on our calendars,” Hunter said.

Amazon’s Arizona lobbyist, Don Isaacson, declined to comment for this story.

Ahlmer is looking to be involved with the task force, which has told her ARA is welcome to recommend its own experts to make presentations and join subcommittees.

The ARA does have an ally in Rep. J.D. Mesnard . Mesnard was a proponent and co-sponsor of SB1338. Mesnard helped craft the latest version of the bill that would have forgiven a $53 million bill Arizona sent Amazon.com in exchange for the state instituting an online sales tax.

Mesnard is determined to see this issue resolved and said he will reintroduce a bill in the next session if the task force does not reach a resolution, he said.

“We have retailers in Arizona that have been feeling the consequences of this tax policy and while it may be a federal issue I have an obligation to them for fairness and creating a system that makes sense for Arizona,” he said.

Mesnard has been talking with Amazon, but said the company will be opposed to the bill until they know the governor is on board, he said.

“Not to say they’ll flip their position automatically, but I think there’s a much greater likelihood- especially if what they (Amazon) have done in other states is any indication,” Mesnard said of agreements the giant online retailer has reached with other states.

Most recently, New Jersey Gov. Chris Christie reached a deal to collect sales tax starting in 2013. Other governors have also thrown their support behind collecting Internet sales tax, including Iowa Gov. Terry Branstad, Michigan Gov. Rick Snyder and Tennessee Gov. Bill Hasam.

Amazon is currently collecting sales tax in Kansas, Kentucky, New York, North Dakota, Texas and Washington.

Mesnard informed the Governor’s office that he has been speaking with Amazon and recommended they do the same. But the governor’s office wasn’t interested in engaging the issue, he said.

Matthew Benson, spokesman for Brewer, said that the governor is not involved in this issue and isn’t interested in making negotiations similar to what other states have done. However, Benson also said, “We’re not precluding the possibility of talks in the future.”

Mesnard said he is perplexed as to why the Governor’s Office isn’t willing to consider negotiations.

“That’s the first I’m hearing they’re not willing to negotiate the way other states have and I wonder why. If we don’t handle this the right way everyone could be upset – retailers are already worked up and upset the governor hasn’t engaged the way other states have,” he said.

Rep. Debbie Lesko said she opposes any move to force online retailers to collect taxes.

“The vast number of my constituents don’t want taxes raised,” the Glendale Republican said. “Overwhelmingly, the people I talk to like it the way it is.”

Instead Lesko prefers the issue be resolved at the federal level, not state-by-state. Her other solution would be to simply reduce tax on all retailers.

ARA is holding off on any action until the task force begins, Ahlmer said.

“We’re not automatically thinking we have to do something different than what the task force will recommend. If adopted, we hope their recommendations would move forward,” she said. “We’re not putting all our eggs in one basket yet, because we don’t know what the task force is going to do.”

2 comments

  1. Amazon should speak with TaxCloud.

    My wife and I own and operate a small online business benefitting greatly from technological innovation and scalability made possible by Cloud Computing. Until recently we were struggling with legacy tax procedures in our home state. The administrative burdens and expenses complying with States’ tax laws became onerous forcing me to search the Internet for a solution. What I found seems, to many, unbelievable.

    My company now employs free technology hosted on Amazon’s Ec2 cloud infrastructure enabling my company to easily calculate, collect and remit sales tax in any jurisdiction for any state. TaxCloud seamlessly integrates with multiple payment platforms and shopping carts eliminating unnecessary administrative burdens. Now my tax processes are automated and efficient.

    3dcart CEO Gonzalo Gil states:

    “As another building block in our effort to ease the management process for online store owners, TaxCloud is the kind of efficiency application that is practical now and helps you plan for the future….this represents another way that automation is saving time and money for online retailers.”

    Technology now freely available to any size business easily handles sales tax processing for any jurisdiction in any state. As Mr. Shay from the NRF points out it is now easier for businesses to process over 10,000 different tax jurisdictions than deal with the multiple complexities involved with shipping. Furthermore, the ICSC has discovered an average of 90% of Internet consumers desire to have sales tax collected by merchants at points of purchase instead of having to track and remit use tax individually. Governments also realize sales tax automation ensures more of every tax dollar funds intended programs.

    I strongly support and urge Congress to immediately pass S.1832 the Marketplace Fairness Act granting states the choice to efficiently enforce their existing sales and use tax laws. Individuals, businesses and government will all benefit tremendously utilizing the efficiencies made possible by new technologies coupled with the power and scalability of Cloud Computing.

  2. Big surprise that, given a choice between paying online tax and not, most people would prefer to keep that money in their pockets. I, however, recognize that the state has suffered a setback with so many retail purchases being made online. I, for one, would be willing to pay sales tax online just like I do in stores.

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