ABA Calls on Alabama to Introduce E-Fairness Legislation
Faced with significant education and general budget shortfalls, officials in Alabama are examining the possibility of bringing the state into compliance with the Streamlined Sales and Use Tax Agreement (SSUTA) to recoup an estimated $104 million that could be lost in 2009 to remote online retailers, as reported by the Alabama Press-Register.
This week, the American Booksellers Association wrote to Alabama Revenue Commissioner Tim Russell to thank him for the state's interest in pursuing e-fairness and to urge Alabama to model its e-fairness efforts on recent laws passed by New York, North Carolina, and Rhode Island.
Alabama currently faces a general fund budget shortfall of $71 million and an education budget shortfall of $680 million, APR noted. In addition, it is estimated that the state will lose about $104 million in 2009 to online retailers who do not charge sales tax on purchases made by Alabama residents. Russell told APR that there is "momentum developing across the country" to require online retailers to collect and remit sales tax and that he believes the state should revise its sales tax code to come into compliance with the Streamlined Sales and Use Tax Agreement.
In the letter to Alabama's Department of Revenue, ABA CEO Oren Teicher wrote: "In the past year, North Carolina and Rhode Island have followed New York State's lead and passed provisions that require out-of-state merchants that have clear nexus in the state to collect and remit sales tax. It is expected that a number of other states will introduce e-fairness legislation in 2010.
"We believe that the actions in these three states have clear implications for Alabama," Teicher continued, "especially considering the current challenging economic climate.... [Alabama's] current shortfalls only provide more reason to clarify and enforce the state's existing sales and use tax laws. This would ensure that out-of-state retailers with nexus in the state through online affiliates collect and remit sales tax."
While ABA supports a national solution to the issue of e-fairness, Teicher stressed in the letter that the remedies offered by SSUTA are several years away at best, and that seeking an intra-state solution is not mutually exclusive with pursuing SSUTA. --David Grogan
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October 29, 2009 Dear Mr. Russell: On behalf of our many independent bookstore members in Alabama, we are grateful to hear that you would like the State of Alabama to address the very important issue of e-fairness by revising the state's tax rules to comply with the Streamlined Sales and Use Tax Agreement (SSUTA). For too long, states have unintentionally subsidized out-of-state businesses by allowing remote merchants with nexus in the state to skirt existing tax laws, thereby letting millions of dollars in sales tax revenue go uncollected. However, the remedies offered by SSUTA are, at best, several years away, and, in the meantime, Alabama's retailers are operating in an economic crisis and competing on a very uneven playing field, as giant online retailers refuse to obey the law and collect state sales tax. Given this situation, we strongly urge you to craft an in-state solution modeled on New York State's Internet Sales Tax provision. In the past year, North Carolina and Rhode Island have followed New York State's lead and passed provisions that require out-of-state merchants that have clear nexus in the state to collect and remit sales tax. It is expected that a number of other states will introduce e-fairness legislation in 2010. We believe that the actions in these three states have clear implications for Alabama, especially considering the current challenging economic climate. According to the Alabama Press-Register, at a time when Alabama faces a budget shortfall of more than $71 million and an education budget shortfall of $680 million, the state will lose some $104 million to online sales in 2009. The current shortfalls only provide more reason to clarify and enforce the state's existing sales and use tax laws. This would ensure that out-of-state retailers with nexus in the state through online affiliates collect and remit sales tax. We have always supported, and continue to support, a national solution to the equitable collection of sales tax, including SSUTA. However, the final enactment of SSUTA will require much broader support among state governments, extensive negotiations, and a good deal of compromise before the complex agreement can be put in place. This will take a great deal of time, and Alabama needs a solution now given the economic crisis faced by Alabama's retailers, many of whom are facing closure, in part, because their competitors are not collecting sales tax. Again, our many independent bookstore members in Alabama appreciate that you are seeking solutions to the issue of e-fairness. New York State, North Carolina, and Rhode Island have provided a very workable solution, and that is to enforce existing sales tax laws now, an answer that does not block future enactment of SSUTA. Importantly, we are not discussing any new "Internet taxes." We are simply asking you to equitably enforce existing tax laws by introducing legislation similar to New York State's, which requires out-of-state retailers with nexus in the state -- through an office, warehouse, sales agent, or via online affiliates -- to collect sales tax. Thank you for your consideration. Sincerely, Oren J. Teicher, CEO |
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