Merchants Eye Online Tax Debate in U.S. Senate

By Dave Franzman, Reporter


By Dave Franzman

MIDDLE AMANA, Iowa - Retailers in Iowa are eyeing the debate in the U.S. Senate that would require online sellers to begin collecting sales tax on any shipment to any state.

The Market Fairness Act of 2013 would apply to any company doing $1-million or more a year in online sales. States would have to provide free computer software to help retailers calculate sales taxes in different locations and a single location to receive the payments. Under current law, states can only require retailers to collect sales taxes if the store has a physical location in the state. Political observers expect the bill to pass in the Senate but its fate in the U.S. House is uncertain.

The debate is getting attention in the Amanas because some of the largest retail outlets in the villages catering to visitors now are doing as much as 40 percent of all their sales either online, by phone or through mail order.

Charisse Lawrence, director of e-commerce for the Amana Society, said currently taxes on online sales are only collected in Iowa, Illinois and Minnesota. The tax is collected in Illinois and Minnesota because the Amanas at one time had a retail presence in those states.

Lawrence said collecting tax for sales in every state would be a daunting task. But she does understand that “bricks and mortar” retailers have a complaint when competitors get an unfair price advantage by not collecting the sales tax.

“If they do pass it, we’ll have to deal with it. We want to continue to ship online sales for Amana and we’ll have to deal with it however it comes out,” Lawrence said.

Lawrence said if online, phone and mail order sales count together, then the online sales from the larger Amana retailers would exceed the $1-million dollar figure. The Meat Shop, General Store, Woolen Mill and Furniture Shop operate a joint online sales office in Main Amana.

Shoppers, like the Amana retailers, have heard all the arguments that online sellers who don’t collect the tax have an unfair advantage. Two out-of-state visitors said they would have to agree.

Jerry Gaughan, visiting from Massachusetts, said “as someone who occasionally likes to go to a shopping mall and likes to find stores and find things to buy, that’s not going to be possible unless the playing field is leveled.”

Another traveler, Dave Bucheck from Minnesota, echoed that feeling.

“I agree with them (retailers) it’s kind of a bad deal there’s too many people that will go to a bricks and mortar store and try out or view items and then go and order them online,” Bucheck said.

While the Senate bill would require states to provide free software to out-of-state retailers, merchants say they’d still have to spend time and money to make the state tax collections work.

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