February 13, 2009 By Wayne Hanson
"My legislation simply provides a mechanism to uphold current law and collect revenue due to the state." -- Florida Rep. Michelle Rehwinkel Vasilinda (pictured)
According to Florida Rep. Michelle Rehwinkel Vasilinda, Florida should begin collecting taxes on Internet purchases to offset budget shortages. Rehwinkel Vasilinda earlier this week filed the Streamlined Sales and Use Tax legislation (HB 329) and sent letters to members of Congress and President-elect Barack Obama urging them to pass federal legislation that will enable states to collect Internet sales taxes. In the letter, she urged them not to be "bullied by bloggers seeking to distort the truth."
A post on Rehwinkel Vasilinda's Web site claims Florida is losing anywhere from two to four billion dollars a year because of uncollected sales taxes on Internet purchases.
"I believe that with adversity comes opportunity and we should look for ways that will help Florida out of this financial crisis" said Rehwinkel Vasilinda. "My legislation simply provides a mechanism to uphold current law and collect revenue due to the state."
A bigger issue is: will the laws change to require online retailers to deal with hundreds of state and local taxation issues and regulations? The Supreme Court's Quill Decision set a standard that in order for a state to require a business to collect sales taxes, the business must maintain a physical presence in that state. New York is one of a number of states disputing that. Amazon.com, for example sued New York following passage of a state law that seeks to extend the definition of "physical presence." According to the new law, any Web site in the state that makes commissions by referring customers to an out-of-state sales site would constitute such a presence. Amazon and many other online retailers advertise using links on Web sites.
The American Booksellers Association (ABA) Web site calls for "e-fairness" through equitable enforcement of existing state tax laws. "Tax laws in the 45 states that collect sales tax stipulate that when a retailer has any physical presence in the state," says the ABA, "whether it be a retail store, warehouse, office or sales agent, the company must collect and remit sales tax on purchases made by customers in those states." By such reasoning, the ABA appears to consider any online link to a site as a "sales agent."
The ABA goes on to say that taxing local bookstores while online sales sites are not taxed is unfair, as local customers can then shop online tax free. "As a result," says the ABA, "in-state retailers lose business and the states lose much-needed tax revenue."
In the meantime, Amazon placed a statement on its Web site that says: "Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the state of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax."