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Retailers put new pressure on Amazon.com over sales taxes

Expect a sermonette if you ask Carla Jimenez about Amazon.com's price advantage: It collects no sales tax in Florida while she must charge 7 percent.

"It's shameful," said the co-owner of Inkwood Books in Tampa. "How can a state government so reliant on sales tax not fix this for 19 years?"

Jimenez will find like minds in a campaign launched by a new pressure group called Alliance for Main Street Fairness. It's a parade led not by retail's mom and pops, but the pachyderms: Wal-Mart, Target, Best Buy, Home Depot and Sears, which unlike Amazon, by law must collect sales tax on their online ventures.

Frustrated with inaction, they're turning up the political heat while portraying some recent steps by Amazon, the nation's 19th-biggest retailer with annual sales of $19 billion, as proof its business model is rooted in tax avoidance.

On the line nationally is about $6.8 billion in annual sales taxes online retailers like Amazon don't tack on transactions. In Florida that would be $500 million in extra state business-to-consumer sales tax revenue in 2012, according to a University of Tennessee study. Long term, e-commerce sales are rising faster than retail sales and eroding the tax base.

Floridians already owe sales taxes on online purchases. But few pay unless it's collected by a retailer.

Not that the job is too complex. Amazon collects taxes in Florida for any of 1.5 million independent sellers on its site that ask.

The U.S. Supreme Court ruled in 1992 that mail-order sales companies don't have to collect in states where they have no presence such as stores, offices or warehouses. That's why Amazon collects in only five states while its biggest online rivals must collect almost everywhere.

The only solution, the court ruled, was a national one with simple rules listing what's taxable and what isn't adopted by each state Legislature. With Congress finally about to weigh enabling legislation, only 24 states have agreed to what would be a uniform system called sales tax "streamlining."

In Florida, bills are pending, but lawmakers have been wary of toying with their Swiss cheese tax code.

"This is not about a tax increase," said Rick McAllister, chief executive of the Florida Retail Federation. "It's about tax fairness."

Amazon circled the wagons after other cash-strapped states recently turned more aggressive. Presented a bill for $269 million in uncollected sales taxes in Texas, Amazon chose to pull out, closing a distribution center near Dallas and moving a 1,000-worker addition to Arizona.

Five states tightened the definition of Amazon "affiliates," thousands of independent websites that get 10 to 15 percent commissions for ad links that deliver shoppers to Amazon. New laws consider affiliate relationships enough presence to force Amazon to collect taxes.

In response Amazon dropped tens of thousands of affiliates in Hawaii, North Carolina, Rhode Island and Illinois. But it kept those in New York, where it joined Overstock.com, another tax-free dot-com, in a suit challenging the new law.

Amazon said it's only preserving a legal advantage.

"We have never opposed collecting sales tax under a constitutionally permissible system that is applied even-handedly," said Paul Misener, vice president of global public policy.

Reach Mark Albright at albright @sptimes.com or (727) 893-8252.

Retailers put new pressure on Amazon.com over sales taxes 03/28/11 [Last modified: Tuesday, March 29, 2011 12:05am]
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