Bricks and Mortar Aim to Nail Down Sales Tax; Online Shopping Losing Levy-Free Edge

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Byline: Valerie Richardson, THE WASHINGTON TIMES

It's a scenario all too familiar to retailers: A customer walks in, asks to see a product, discusses it at length with the sales staff, and then pulls out his cellphone.

Jason Brewer, vice president of communications and advocacy for the Retail Industry Leaders Association, explains what happens next: He uses his smartphone to take a picture of the bar code on the back of the item, and then, right in front of the sales person, he checks prices and orders the item online.

Why? Because most online outlets don't charge sales tax, unlike traditional bricks-and-mortar stores. Buying online, especially when it comes to jewelry, cameras, computers and other high-end electronics, can save consumers a hefty chunk of change. But the costs to traditional retailers, not to mention state and local governments, are mounting.

Not only does the retailer lose the sale, but the sales staff just lost30 minutes telling the customer about the product, Mr. Brewer said.

It's infuriating to store owners, but after years of griping about the lack of fairness, this may well be the last holiday shopping season when bricks-and-mortar stores operate under a sales-tax handicap. A bipartisan consensus appears to be forming in Congress in favor of legislation that would close the tax loophole.

Such bills have come and gone for years, but the political winds took a turn this year, thanks largely to the efforts of lawmakers in California. The state waged a high-stakes duel with Amazon.com and won after the online giant agreed in September for the first time to comply with a state sales tax instead of fighting it in the courts or at the polls.

Amazon.com had vowed to spend tens of millions of dollars on a ballot referendum to overturn the law, which the state countered with a threat to pass the bill as an urgency measure that voters could not repeal. Amazon.com ultimately blinked and signed off on a deal in which remote sellers agree to pay the California sales tax after a one-year grace period unless Congress approves national rules.

The California move injected fresh enthusiasm into federal efforts to level the sales-tax playing field. Within weeks, the House and Senate had introduced bipartisan legislation giving states the option of collecting sales taxes from online sellers.

What lit the wick was California, said Danny Diaz, a spokesman for the Alliance for Main Street Fairness. Amazon was sustaining an unbelievable amount of damage to their brand. I think Amazon understands that a [federal] bill is going to pass, and they can be part of the conversation or not. …