Maryland Latest State to Introduce Internet Sales Tax Provision

Legislators in Maryland are the most recent lawmakers to introduce e-fairness legislation. The state joins California, Connecticut, Hawaii, Minnesota, and Tennessee in considering legislation that would require out-of-state companies that have affiliates in their states to collect and remit tax on sales made to in-state residents over the Internet. Also, lawmakers in Florida have introduced a bill to bring the state into compliance with the Streamlined Sale and Use Tax Agreement, and Connecticut's Finance, Revenue, and Bonding Committee has approved the Connecticut Internet Sales Tax provision and has sent it to the state senate.

Following the introduction of the Maryland legislation, the American Booksellers Association e-mailed booksellers in Maryland to urge them to contact their state lawmakers in support of the Internet sales tax bills currently under consideration in the state senate. The legislation is modeled on New York State's Internet Sales Tax provision signed into law in April 2008 and reaffirmed in January when a New York State judge dismissed a legal challenge made by Amazon.com.

In Connecticut, e-fairness cleared an important hurdle when the Finance, Revenue, and Bonding Committee issued a "Joint Favorable Report" for the proposed Internet sales tax legislation. The committee noted that, if passed, the state is anticipating approximately $8.5 million in tax revenue per year beginning in fiscal year 2010.

As the bill heads to the State Senate, ABA COO Oren Teicher stressed the importance of booksellers contacting state senators and urging them to support the bill. "It is imperative that lawmakers understand that locally owned retailers support this provision. If you haven't yet written your legislator, please, take a moment and do so," Teicher said. "And if you have written already, it is worthwhile writing again to stress your support for this provision. Just as in New York State, we expect the debate over this bill to be intense -- so, it's crucial that booksellers make sure their voice is heard." Teicher also recommended that booksellers ask like-minded retailers, businesses, and residents in their communities to write lawmakers, as well.

To help Connecticut booksellers in this important advocacy outreach, the New England Independent Booksellers Association (NEIBA) and ABA have prepared a template letter, that can be adapted and sent to elected officials. (Here's contact information for Connecticut state senators and state representatives.) NEIBA and ABA also asks that you notify NEIBA at steve@neba.org and David Grogan, ABA public policy liaison, at dave@bookweb.org, when you have sent your letter. This will help both NEIBA and ABA compile information to support this lobbying effort.

In Maryland, if the proposed e-fairness legislation is passed, a seller is presumed to have nexus if the seller enters into an agreement with a resident of the state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers to the seller, whether by a link on an Internet website or otherwise. In addition, the cumulative gross receipts from sales by the seller to customers in the state who are referred to the seller by all residents having an agreement with the seller must be greater than $10,000 during the preceding four quarterly periods ending on the last day of February, May, August, and November for the seller to be required to collect sales tax.

In addition to the booksellers in Maryland, California, Connecticut, Hawaii, Minnesota, and Tennessee, ABA is urging booksellers in the other states that collect sales tax to call on their lawmakers to introduce legislation in support of e-fairness.

Booksellers can find a template letter to adapt and send to their lawmakers on ABA's Sales Tax Initiative page. Booksellers are also asked to notify both their regional association and ABA's David Grogan when they have sent letters. This will help both the regional associations and ABA compile information to support their lobbying efforts. --Dave Grogan