Three States Introduce E-Fairness Legislation

Booksellers Urged to Contact State Legislators

Over the past two weeks, the Campaign for E-Fairness has gained tremendous momentum as legislators in four states introduced Internet sales tax legislation. Legislators in Connecticut, Hawaii, and Minnesota are the latest to introduce legislation that would require out-of-state companies that have affiliates in their states to collect and remit sales tax. The legislative activity in these three states follows the introduction of similar legislation in California.

This week, in joint initiatives, the New England Independent Booksellers Association, the Midwest Booksellers Association, and the American Booksellers Association e-mailed booksellers in those states to urge them to contact their state lawmakers in support of their respective Internet sales tax bills. The legislation in each state is modeled on New York State's Internet Sales Tax provision, signed into law in April 2008 and reaffirmed last month when a New York State judge dismissed a legal challenge made by Amazon.com.

"We are pleased to see lawmakers in Connecticut, Hawaii, and Minnesota join California and New York in recognizing the importance of locally owned retailers to their state's economy by going to bat for e-fairness," said Oren Teicher, ABA COO. "We are asking all of our bookstore members in each of the four states with new bills to contact their legislators to urge support for these bills. As we've noted many times, booksellers can effect change. The hard-fought victory by retailers in New York State clearly opened the door for e-fairness in these four states. And, considering a New York Supreme Court judge recently threw out Amazon.com's challenge to the law, we expect to see this trend continue."

Teicher added: "In addition to the booksellers in these four states, we continue to urge 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 their letters. This will help both the regional associations and ABA compile information to support their lobbying efforts.

Here is a brief rundown of the bills:

Connecticut. If passed, S.B. 806, would require out-of-state retailers to collect and remit sales tax when the retailer sells through an independent contractor or other representative, provided the out-of-state retailer has an agreement with a Connecticut resident who directly or indirectly refers potential customers to the out-of-state retailer via Internet link or other means, TaxNews noted. The bill applies to those out-of-state retailers whose cumulative gross receipts from sales by the retailer to in-state customers who are referred to the retailer by all residents with such an agreement is in excess of $5,000 during the preceding four quarterly periods.

S.B. 806 was introduced by the Connecticut Senate.

Hawaii. If passed, H.B.1405 would expand the definition of "engaging" in business to include "the sale of tangible personal property or taxable services" by an out-of-state entity soliciting business through an "independent contractor or other representative" if the entity entered into an agreement with a Hawaii resident who referred potential customers to the out-of-state retailer via Internet link or other means, TaxNews reported. The legislation applies to those out-of-state retailers whose gross receipts from affiliate sales to customers in Hawaii exceed $10,000 during the preceding four quarterly periods, TaxNews noted.

H.B. 1405 was introduced in the Hawaii House of Representatives by Rep. Isaac W. Choy (D-24).

Minnesota. If passed, S.B. 282 and H.F. 401 would "tax some Internet sales" by defining "solicitor" as a person -- whether this person is an independent contractor or other rep -- who solicits business for the retailer in the state, as reported by CCH TaxNews. A retailer would be presumed to have a solicitor in Minnesota if the retailer entered into an agreement with a Minnesota resident who referred potential customers to the retailer via Internet link or other means, TaxNews explained. The legislation applies to those out-of-state retailers whose gross receipts from affiliate sales to customers in Minnesota equaled at least $10,000 in a specified 12-month period, TaxNews noted.

S.B. 282 was introduced by Minnesota Sen. Thomas Bakk (D-06), chair, Senate Taxes Committee. H.F. 401 was cosponsored and introduced by Reps. Ann Lenczewski (D-40B), chair, House Taxes Committee, and Loren Solberg (D-03B), member, Taxes Committee. --Dave Grogan