Our View: There needs to be a fair, easy way to tax online sales - Ahwatukee Foothills News: Valley And State

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Our View: There needs to be a fair, easy way to tax online sales

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Posted: Sunday, August 14, 2011 4:00 am | Updated: 11:32 am, Sun Feb 12, 2012.

When it comes to online businesses, big and small, Arizona is a haven.

We have young entrepreneurs, like recent ASU design studies graduate Ayo Skeete, who once made and sold necklaces to her mother's friends but now has customers around the world through the online marketplace Etsy.

Then there is e-tailing giant Amazon, with three - soon to be four - massive distribution centers in Arizona. But in addition to selling everything from books to groceries, Amazon also helps many small businesses like Skeete's sell their wares online as "associates" who use the site as a sales platform.

One reason our leaders try so hard to attract big companies like Amazon to our state is jobs. Another is sales tax revenue. This is where the situation gets complicated, and it's also where the double standard begins.

Etsy tells its sellers to figure out what taxes are required and report and remit them to the appropriate taxing authority. It's hard to find even such scant helpful information on Amazon's site - but they have made it clear through their actions that they'll cut you loose if your state's lawmakers decide to force their company to collect the taxes for you. Ask former Amazon Associates in California and Illinois.

How can they do this? In 1992 the U.S. Supreme Court ruled that a company must have a physical presence in a state to be required to collect taxes for that state. Arizona doesn't force merchants using Etsy or Amazon as a sales platform to collect state sales taxes, instead requiring customers, as many other states do, to voluntarily report how much they bought from out-of-state merchants, and pay the appropriate levy at tax time.

It's convenient for online merchants to saddle their customers with the final responsibility of giving Caesar his due. But brick-and-mortar establishments like Tempe's Changing Hands Bookstore don't have that luxury. In a book marketplace that is already contracting with the recent collapse of the Borders chain, they face even greater competition from online booksellers like Amazon, whose prices look so tempting without that "plus tax" label. It's also hard to swallow the idea that Changing Hands' charming 15,000-square-foot store somehow constitutes more of a "physical presence" than Amazon's millions of feet of fulfillment facilities.

Amazon, as the Seattle Times recently quoted, would happily collect tax from its customers when a fair and simple way to do so presents itself. With budgets stretched beyond belief, more policy makers than ever, on both sides of the aisle, are trying to make that happen. In Congress, Democrats have been trying to gather steam for years on a bill to free states to require retailers with no local presence to collect sales tax.

Here in Arizona, Republican Phoenix lawmaker Jim Weiers pushed a bill earlier this year in the Legislature that would require firms like Amazon to collect the state's 6.6 percent sales tax when they ship items to customers in this state. It died in committee. According to Capitol Media Services, Weiers said it's only fair that online merchants be forced to collect the same levies as local businesses.

Even Weiers' fellow Republican - state Rep. Tom Forese of Gilbert, who opposes taxing online businesses for now because he says they can help the economy - knows things aren't fair and the issue will have to be revisited: "I just want to make sure that whatever actions we're taking as a state we're being cautious and deliberate,'' he told Capitol Media Services' Howard Fischer.

Amazon's idea of fair is predictably limited. But they're right that fair and simple is the way to go. If they really believe in that, they should join with lawmakers in the communities that support them to cautiously and deliberately define a fair and simple system they can buy into, rather than waiting for it to be forced upon them. After all, big business loves having a seat at the table, and Arizona loves giving it to them.

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