Forbes: Online taxes must wait, for now - Hampton Roads

By Carolyn Shapiro
The Virginian-Pilot
? August 14, 2012

CHESAPEAKE

U.S. Rep. Randy Forbes told Hampton Roads retailers Monday he doubts that legislation requiring sales tax collection on Internet transactions will get through Congress this year.

When such bills do come to the House and Senate floors for a vote, Forbes said, he expects them to pass, but legislators first must work out details to ensure the success of new rules governing online sales.

"I truly believe we're going to see some legislation that deals with that," Forbes told about 20 local business owners gathered at Terebinth Patisserie & Bistro on Eden Way. "I'm not optimistic you'll see anything out before January."

Forbes, a Chesapeake Republican who represents the 4th District and is running for re-election this year, requested the meeting with members of Retail Alliance to discuss the Internet sales tax proposal and other federal action that could affect their businesses. He focused on excessive taxes, government regulation and costly litigation as the frustrations he hears most from merchants.

"I have never seen a time when business people seem more up against the wall than they are now," he said.

Retail Alliance, the Norfolk-based trade group for the region's retailers, and its brick-and-mortar members have pushed for state and federal legislation to correct what they consider an unfair advantage enjoyed by online operators that don't collect sales taxes on consumer purchases. Under common practice sanctioned by a U.S. Supreme Court decision in 1992, most Internet retailers don't remit sales taxes to states where they have no physical presence.

In Virginia, the General Assembly passed legislation this year to clarify the requirement that online retailers collect the 5 percent sales tax if they have physical operations in the state related to product sales. The law, scheduled to go into effect in September 2013, would change the practices of Internet giant Amazon.com, which has a distribution center in Sterling but has never collected sales tax on purchases by state residents.

Joe Taylor, president of local hardware chain Taylor's Do-It Center, told Forbes that he recently bought two items online that he couldn't find in stores. For one of them, a small refrigerator, he paid no sales tax to the Internet retailer.

"It just is not right," Taylor said to Forbes, explaining that his company does website sales and collects taxes in every state where a purchase is made. "We know you get it, and we appreciate your energy behind this bill."

Forbes said he supports the legislation but believes that to win congressional approval it will need a provision that exempts small retailers with online sales below a certain level. Although Taylor said the chain's system has software to handle tax differences in each state, some have voiced concern that the change will create problems for small businesses with few online sales, Forbes said.

"A lot of people recognize that you've got some small entities, and that's going to be onerous for them," he said.

Now in recess, Congress has eight days left in September in session and then the "lame-duck" period after the election, Forbes said. In that limited time, legislators are likely to focus on high-priority decisions such as the expiration of tax cuts and reductions in defense spending, which also could cause major upheaval in Hampton Roads, he said.

The expected delay for the online sales tax bills disappointed Philip Scotti, who owns four local Philip Michael Fashion for Men apparel stores and loses customers who prefer to save the $15 in Virginia sales tax on a $300 suit. He'll have to continue to battle that competition through the crucial holiday shopping season, he said.

For Chris Sink, owner of four Hi-Ho Silver jewelry stores in Hampton Roads, the lack of Internet sales taxes isn't as big a concern as health care costs, which are rising 10 percent to 20 percent annually for his business, he said. He appreciated Forbes' desire to curb those costs and address the tax burden on businesses.

"I just want to see action take place," Sink said after the meeting, expressing frustration with Congress. "I don't see where much gets accomplished at the end of the day to clear away those roadblocks."

Carolyn Shapiro, 757-446-2270, carolyn.shapiro@pilotonline.com

Source: http://hamptonroads.com/2012/08/forbes-online-taxes-must-wait-now

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