The Retailers Edge | Minnesota Retailers Assocation

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A loophole in Minnesota's sales tax law has allowed out-of-state, online-only retailers (including Amazon.com, the world's largest online retailer) to operate under different rules than every other business in Minnesota. Amazon refuses to collect the sales tax at the time of purchase even though bricks-and-mortar stores are required to do so. But there is a proposal before the Minnesota Legislature that would address this disparity, helping businesses keep their doors open and retail workers employed, while sustaining our communities and boosting Minnesota's revenue at a time when it is needed most.

The fact of the matter is that most purchases made in Minnesota are subject to state sales tax. This sales tax obligation exists whether the purchase is made in person, over the phone or online.

When online-only stores don't collect sales tax, the burden is passed on to consumers, who are legally required to record, report and remit payment when they file their annual tax returns. This surprises and confuses most people.

So why aren't all online-only retailers collecting sales tax? The good news is that many do. But Amazon.com and several others have chosen to exploit a loophole in Minnesota law. And they use it as an excuse to not collect the tax at the time of purchase, despite the fact that the tax is owed to the state, passing the burden on to the consumer.

Governor Dayton included a proposal in his budget to close the sales tax loophole and level the playing field for Minnesota businesses. The legislature is now considering the proposal (Senate File 458), which has strong bipartisan support among job creators in Minnesota seeking nothing more than fairness and a universal set of rules for all businesses.

Employers like those in Duluth support this legislation because they want a fair competitive environment. Whether a retailer operates on the Internet, on Main Street or in a mall, competition should occur on a level playing field. If this doesn't happen, Minnesota's bricks-and-mortar retailers will continue to be the victims of a system dating back to the days before e-commerce even existed.

We are simply asking the state to hold all retailers to the same standard when it comes to sales tax collection. As one store owner told me, "If someone beats me on price, that's fair and square. But when someone beats me on sales tax, that's just plain wrong."

Bricks-and-mortar retailers like Target and Barnes & Noble collect sales taxes on online purchases, just as they do when something is procured in their stores. They also contribute significantly to property and payroll taxes, and they support local civic organizations, youth activities and other community causes. Smaller retailers, like many in and around Duluth, are also known for their generosity to local charitable causes. They are the lifeblood of the local economy. And they all have one thing in common: They abide by the Minnesota law that requires them to collect the sales tax.

The same cannot be said for Amazon.com.

On behalf of retailers statewide, the Minnesota Retailers Association is advocating to level the sales tax playing field by passing Senate File 458. This is the fair and responsible decision for Minnesota. We need lawmakers to unite in holding online-only retailers accountable for collecting the same sales taxes that other businesses do. Until then, law-abiding retailers with stores around the state will remain at a severe competitive disadvantage.

If you agree with our cause to bring sales tax fairness to Minnesota, I urge you to call on your legislators to make this overdue change in state law.

Brian Steinhoff is president of the Minnesota Retailers Association (MnRA).

See full article here

Pro theft rings transform shoplifting into a multimillion-dollar business

Target, Supervalu, Walmart and others are fighting back.

Stores have always had shoplifters. But not always like this.

Gangs of professional shoplifters, organized into theft rings, have become a growing menace for U.S. retailers. Roaming from store to store, they steal large quantities of easy-to-sell items - such as baby formula, razor blades, video games or batteries. "They grab a cartload and push it out the door," said Lee Vague, Woodbury police chief. "That raises the red flag: Why this item? Why so many? Where's the market?"

The marketplace is often online, where stolen items are sold to consumers. Just as legitimate buying and selling online keeps growing, so do the organized rings that traffic in stolen goods.

Now, traditional retailers, including Minnesota-based giants Target and Supervalu, are seeking tougher laws that match the scale of the crime. "There is a whole underground economy, and there are groups of people - some loosely organized, some organized like a business enterprise - that steal from stores," said Brad Brekke, Target Corp.'s vice president of asset protection. "They steal very specific items that tend to have a high resale value."

This is a different crime than shoplifting as most people understand it, Brekke says.

"You're talking about sweeping an entire shelf," he said. "It could be anything from iPods to ink cartridges to over-the-counter drugs like Tylenol, because these are things that are wanted by consumers. They can be sold to fencing operations and sold back to the public. It's almost like our business, in reverse." For Minneapolis-based Target Corp., ordinary shoplifting is still the most common crime. But its biggest losses come from organized theft rings, due to their scale and sophistication.

When police broke up a Chicago theft ring in November, they seized $4.5 million in cash and a warehouse full of goods. When Woodbury police cracked a separate case, "we sent moving vans back over to other cities to get things back," said Vague, Woodbury's police chief.

Cub Foods estimates its Twin Cities-area stores lose $2 million to $5 million a year to organized theft rings. Its parent company Supervalu puts annual losses at $25 million, at least. And rising.

"Our average shoplifting apprehension has increased 46 percent in the last three years - which means they are stealing them in quantity, and we're stopping them in quantity," said Carol Martinson, Supervalu's vice president of asset protection.

Both the National Retail Federation and the FBI cite industry wide losses of $15 billion to $30 billion a year from organized retail crime. And it's not just the big retailers, either. "Big, small, medium - they're all affected by it," said Brian Steinhoff, president of the Minnesota Retailers Association. "If you talk to a women's clothing store, they do get hit by it."

HOW THEFT RINGS OPERATE

Many theft rings seem to combine sophistication with amateur hour. Pulling items off a store shelf, then racing to a waiting car hardly seems the work of a criminal mastermind. But Brekke and others see how deftly those criminal gangs can operate.

"Most of the good ones have a very set MO," Brekke said, referring to their method of operation. They use diversion, teamwork, advanced scouting, mapping tools and knowledge of the law.

Organizations operate in layers, which shields the ringleaders from prosecution. A typical theft ring will have "a minimum of six" layers between the low-level "boosters" and the ringleader, says Supervalu's Martinson.

That's a lot of layers for investigators to peel away, so cracking these cases is often time consuming.

Target's Brekke gives an example of how a theft ring might work:

A fencing operator sends word to low-level shoplifters, known as boosters, that he'd like iPods.

"Literally, there's an order put out," Brekke said, specifying how many iPods the fence wants and what he'll pay. The thieves "tend to map out the stores that carry them, so it's the Best Buys, the Targets, the Walmarts ... Many have already done some level of intelligence, they know our level of staffing, how we protect the product, which jurisdictions to avoid.

"They would try to hit anywhere from a half-dozen to a dozen stores (a day)," Brekke added. "They'll make the rounds in the morning and tend by midafternoon to go back (home) ... It's a business to them. They may do this two, three, four days a week."

The mobile gangs tend to hit retailers along major interstates like I-94 and I-35. Yet, smaller communities often are preyed upon. Smaller police departments and a lack of sophisticated security equipment can draw thieves, too.

Martinson recalls Supervalu's Hornbacher's stores in Fargo-Moorhead. "They were just getting killed," she said.

There's one other constant: Shoplifters keep the thefts below $5,000 per store, so if they're arrested, the chance of serious charges is low.

"They know exactly how much they can steal without triggering felony law," Martinson said.

RETAILERS FIGHT BACK

U.S. Sen. Amy Klobuchar has proposed a federal law to make life tougher on theft rings. Minnesota's retailers strongly support it.

"As retail thieves have become more sophisticated, our laws need to be more sophisticated as well," Klobuchar said.

To start, the bill would aggregate theft totals - so shoplifters couldn't duck serious charges by stealing less than $5,000 from each of 10 stores. Criminal charges would be based on the total amount.

The bill would also require more of online auction sites like eBay and Craigslist. They'd have to file suspicious activity reports on suspected criminal sellers and suspend them if confronted with clear evidence.

In a statement, eBay said it supports tougher penalties to fight retail theft, but that it and other Internet leaders opposed Klobuchar's bill, "due to concerns that it harmed Internet user privacy and would be ineffective at addressing the core problem of retail theft." It also says it's "bad policy" to require websites "to turn personal information over to business competitors without the involvement of law enforcement or any proof of wrongdoing."

Klobuchar's bill also tries to promote a better reporting system among police, retailers and federal officials. That would be welcomed by local police, including Woodbury's Chief Vague.

"These are tough cases for a municipal police department to work," Vague said, citing the far-flung nature of organized rings and the complications of teaming with distant police agencies. "Quite frankly, the framework just is not in place for us to deal with it very effectively."

At the state level, retailers support bills that would aggregate thefts at a $1,000 level. Some 24 states have passed retail-theft laws, but Minnesota is not yet among them.

CASES CRACKED

Retailers are taking other steps, too. Although stores compete fiercely for sales, they cooperate to fight this problem.

"There isn't a day that goes by that the Cub Foods team doesn't work with Target or Walmart or CVS," Martinson said.

Using security tapes and inventory records, retailers try to piece together how a theft ring is operating.

"We may actually allow the theft to occur once or twice or three times to understand who is operating and how they're operating,"Brekke said. "We try to shift it from just arresting someone (at a low level) to finding out who is running the operation."

Investigators, police and retailers have had some successes. A sample:

• In the Twin Cities, officials broke up a multi-million-dollar theft ring involving scores of shoplifters who stole DVDs, video games and electronics from Target, Walmart and Best Buy stores. Ten Twin Cities-area residents have been convicted or pleaded guilty.
• In southern California, Supervalu played a role in cracking a huge interstate theft ring. "That was a three-year investigation," Martinson said. "There was $4.9 million worth of inventory, and it took 55 semi-trailers to empty the warehouse."
• Last month in Seattle, police busted a theft ring that had stolen $1.5 million from Target and other retailers. Most of the boosters were drug addicts, police said.
• In Florida, officials shut down a ring run by an extended family that stole an estimated $60 million worth of health and beauty products.
• And in New Jersey, officials shut down a network that used hundreds of boosters, mostly drug addicts, to steal from Target and CVS stores.

"The magnitude is greater than most people realize," Target's Brekke said. "It has a negative pull on business, has a negative pull on tax revenue, has an increased cost to law enforcement."

Tom Webb can be reached at 651-228-5428.

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Experts Discuss Debit Card Debacle

 

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Banks lean on Fed, Congress to drop debit card 'swipe fee'

by Martin Moylan, Minnesota Public Radio

March 25, 2011

St. Paul, Minn. - Just a few months ago, it seemed regulators would surely slash the fees banks charge merchants when they accept debit cards.

But in the courts and Congress, the banks are trying hard to scuttle the fee cuts.

RETAILERS COMPLAIN OF MONOPOLY

Most consumers don't seem to know much about this fee fight between banks and retailers.

Nahte Amamingo of Shoreview knows his bank gets some money when he buys something with his debit card.

"My understanding is that there's a fee," he said at Rosedale Shopping Center. "But the amount, the percentage, I'm not aware of."

Retailers lament that banks and their payment network partners generally get between 1 to 2 percent of every transaction on a debit card. Merchants say that amounts to some $20 billion a year.

Debit cards look like credit cards, but are tied a consumer's bank account. When a consumer buys something with a debit card, money is taken from the consumer's bank account, usually within a day.

Retailers also pay fees when they accept credit cards. But at this point, there's no move to limit those charges.

Retailers contend banks and their payment system partners have long used monopoly power to keep fees high.

Merchants rejoiced when the Federal Reserve proposed cutting debit card fees to a maximum of 12 cents per transaction. The average fee now is about 44 cents. The cap was slated to go into effect this summer.

BANKS HIT FED, CONGRESS

But banks and their payment network partners have been busy bending the ears of Congressional representatives, trying to delay or kill the fee cut which they figure could cost them $14 billion a year.

Even some Federal Reserve Board members have signaled they think the issue needs more study to assess the impact on banks and the extent to which retailers would pass on their savings to consumers in the form of lower prices.

"This is a system that wasn't broken and the government has put themselves in the middle of a very successful payment system," said Jason Korstange, a spokesman for TCF Bank.

TCF has sued the Fed, arguing that capping debit card fees is unconstitutional. The case is making its way through the courts.

"We have a product that we've sold and they're telling us we can't make a profit on that," Korstange argued.

TCF figures the proposed fees cuts would cost it about $80 million a year.

TCF, US Bank, Wells Fargo and other banks contend cutting their debit card fee revenue would not only be unfair but would also harm consumers.

"Banks have said they'd no longer offer these cards as a free service, that they would charge just for carrying the card," said Joe Witt, president of the Minnesota Bankers Association. "Other banks have said they would no longer offer a free checking product."

Some banks have already said they'll end reward programs for debit cards.

UNLIKELY ALLIES

The warnings are scaring some people and winning bankers support from non-traditional allies, such as the National Education Association and the NAACP.

NAACP Senior Vice President for Advocacy and Policy Hilary Shelton wrote the Fed to ask that the fee cut be "thoroughly and expeditiously reviewed prior to implementation to ensure that it will not raise fees or otherwise harm at-risk communities, including communities of color."

Meanwhile, a bipartisan group of U.S. senators is pushing legislation to study the banks' complaints and delay the fee cut.

CONSUMER ADVOCATES SPEAK OUT

While that would please bankers, consumer advocates say it wouldn't benefit the public. They say Congress should see there's no way banks have consumers' interests at heart.

"It's ludicrous to any consumer advocate to think the banks want to protect customers," said Ed Mierzwinski, a consumer advocate at the U.S. Public Interest Research Group. "They want to protect a monopoly that they've had for many, many years is all they want."

Minnesota retailers agree.

Brian Steinhoff, president of the Minnesota Retailers Association, said the fees are excessive and onerous.

"Ask any retailer - small, big, medium - the second biggest cost that goes into the business more often than not, it's these swipe fees.," Steinhoff said.

With billions of dollars at stake, the squabble between retailers and banks over debit card fees promises to drag on for months, if not years.

(The Associated Press contributed to this report.)

 

Amazon v. the States

It never made sense to exempt online retailers from collecting sales tax. It's ridiculous now when so many states are in deep fiscal trouble. Illinois estimates that it is losing more than $150 million a year in uncollected taxes; California is losing an estimated $300 million a year. That would cover more than half the planned cuts for the University of California system.

It's good news that states are using new legal tools to force Internet retailers to do what every other retailer must do. It is disappointing to see Amazon.com fight back.

Amazon and other Web retailers are shielded by a 1992 Supreme Court ruling that retailers could be required to collect sales tax only in states where they had some physical presence. Amazon has kept itself off the hook in several states using warehouses owned by subsidiaries.

That strategy is now being challenged. In October, Texas sent a $269 million bill to the company for four years' worth of taxes, citing Amazon's Texas warehouse, owned by a subsidiary. In South Carolina, Gov. Nikki Haley is reportedly reconsidering a deal cut by her predecessor that would allow Amazon to set up a warehouse there and exempt it from collecting sales taxes.

Last week, Illinois passed a law forcing online retailers to collect sales tax if they have local affiliates - local businesses, blogs or nonprofits - whose Web sites sent business their way in exchange for a cut. New York, Rhode Island and North Carolina have adopted similar laws, and New Mexico, Minnesota and Vermont are considering their own legislation. After Amazon threatened to terminate its affiliate programs in California and Hawaii, governors in both states vetoed similar bills. The California Legislature is trying again.

Amazon isn't giving up. It is disputing the tax charge in Texas and said it will close the warehouse there. It challenged the New York law in state court and lost but is now appealing. It has terminated affiliate programs in Rhode Island and North Carolina and said it will sever its affiliate links in Illinois in April.

Collecting state taxes is not an unreasonable burden for online retailers. Amazon already collects taxes in five states, including New York, and it also collects taxes on behalf of physical retailers that sell through Amazon.

The best outcome would be for Congress to pass legislation requiring all retailers, online and off, to collect sales taxes everywhere they are due. In the meantime, states should not give in to Amazon's pressure tactics.

http://www.nytimes.com/2011/03/18/opinion/18fri3.html?_r=1&partner=rss&emc=rss

 

Push to tax online sales gains strength

Buying something online and avoiding the sales tax counts as one of life's little guilty pleasures.

But an increasing number of states have determined that they can no longer afford that indulgence, and Minnesota may join them in trying to collect sales taxes from online merchants like Amazon.com and Overstock.com.

It's not clear whether these efforts will, in the short run, mean more money for cash-strapped state coffers. In fact, it could reduce the income of website owners who direct traffic to online merchants. Still, it would mark an important first step in establishing a more level playing field for both online and bricks-and-mortar merchants.

Currently, a 1992 Supreme Court ruling says retailers have to collect sales taxes only in states where they have a physical presence. The ruling, handed down before most of us could imagine a commercial Internet, amounts to a built-in price advantage for many online merchants, one Congress has been unwilling or unable to address.

So, states are increasingly taking things into their own hands by rewriting the definition of "nexus," or physical presence.

A bill before the Minnesota Senate, for example, would force any online retailer to collect state sales tax on purchases Minnesota residents make though Minnesota-based websites that refer traffic to those retailers. (Purchases made directly from Amazon's website would still be exempt from sales taxes in Minnesota.)

But turning up the heat on online giant Amazon likely means singeing tiny Web entrepreneurs such as Connie Berg of Northfield.

Berg's FlamingoWorld.com is home to a dizzying array of coupons and special deals with up to 5,000 advertisers, including Amazon. Berg earns a commission if someone clicks on one of those coupons and buys something from one of her advertisers.

Amazon, which did not respond to requests for an interview Monday, has called efforts to tax sales that originate through affiliates unconstitutional. The Seattle-based retailer has retaliated by ending affiliate relationships in Illinois and other states that have adopted measures similar to the one being considered in Minnesota.

Berg told a Senate committee earlier this month that she fears the same thing could happen to her. "If out-of-state retailers believe advertising with me will subject them to collecting taxes, they will drop me," she said. Berg could not be reached for comment Monday.

The Performance Marketing Association (PMA), a California-based trade group, says about 4,000 affiliate marketers in Minnesota earned $290 million in advertising revenue in 2009 and paid $20 million in state income taxes. If Amazon or other online retailers drop them, "the state will gain zero dollars in new sales tax revenue, and only hurt local Minnesota businesses who earn a living from advertising," said Rebecca Madigan, executive director of the PMA.

This isn't the first time this measure has come before Minnesota lawmakers. Sue Zumberge, general manager of Common Good Books in St. Paul, was one of only two people who testified in support of a similar proposal in 2009. The bill's support appears broader this time around. Gov. Mark Dayton has proposed such a measure as a way to help close the budget deficit.

The Senate bill was authored by Taxes Committee Chairwoman Julianne Ortman, a Republican, and it has won the support of the Minnesota Business Partnership, the Metro Independent Business Alliance, Target and Best Buy.

"People seem to understand that if we're not going to raise taxes, then we need to close the loopholes on taxes that we already have," Zumberge said.

Amazon and others have attempted to frame this as a new tax on consumers, but that's misleading. Laws in Minnesota and other states currently require taxpayers to self-report online and catalog purchases that would otherwise be subject to a sales tax. When was the last time you did?

It's unfortunate that Amazon's response is to punish the people who have played a role in its success. The ideal solution would be for Congress to act or the Supreme Court to revisit the matter. That's more likely to happen if states force the issue by acting first.

http://www.startribune.com/business/117979119.html

Amazon Pressured on Sales Tax

By VERNE G. KOPYTOFF

AN FRANCISCO - Across the country, state officials struggling with big budget shortfalls are trying to get Amazon.com to take on a role it does not want: tax collector.

Amazon's skirmishes with states over whether it should collect sales taxes have been an ongoing battle. But the fighting has recently escalated, coinciding with the economic woes that have left a number of states struggling with multibillion-dollar deficits, and looking for money wherever they can find it.

Last Thursday, Gov. Pat Quinn, Democrat of Illinois, signed a law that compels online retailers that work with affiliates in his state to collect sales tax on purchases by residents.

Affiliates are partner sites that earn commissions by advertising or linking to an online retailer's products, sending traffic that way. Lawmakers in California, Hawaii, New Mexico, Minnesota and Vermont have introduced similar legislation.

Amazon, based in Seattle, is fighting back. It vehemently opposes the legislative efforts, and in letters to state officials, has called the provisions unconstitutional and counterproductive.

"We play by the same rules as other retailers, as the national chains collect online only for states where they have physical stores," Paul Misener, Amazon's vice president for public policy, said in a statement.

Meanwhile, last fall, Texas officials sent Amazon a tax bill for $269 million, after determining that the retailer's Dallas-area warehouse, owned by a subsidiary, qualified as a local address under state tax rules. Amazon had argued for years that without stores and offices in the state, it had no obligation to collect sales tax there. The dispute is to be decided in a coming administrative hearing.

In retaliation for Texas's move, Amazon said last month that it would close the warehouse next month and cancel plans to build another.

"It's a time-honored custom to not pay taxes," said Susan Combs, the Texas comptroller. "A lot of people try not to, but it's up to the state to make sure that there's tax fairness."

The new laws are intended to help fill state coffers as lawmakers are being forced to cut funding to education, Medicaid and public safety. The changes are also promoted as leveling the playing field between online retailers and brick-and-mortar stores, which must tack on an extra 8 percent in most states, give or take, to the price of every transaction.

A state can compel companies to collect taxes only if they have a physical presence in the state, or a nexus, as the Supreme Court ruled in Quill Corporation v. North Dakota in 1992. Absent a nexus, online retailers and mail-order companies can sell products without collecting the tax.

What many people fail to realize, however, is that the tax is still due. Residents are supposed to self-report what they owe in their annual state tax filing, but most people do not.

State officials have long lamented the shortfall and sought ways to collect a bigger portion by using a mix of education and threats. California, for instance, expects to be shortchanged $1.15 billion in 2010 from e-commerce and catalog sales, according to estimates from the state Board of Equalization.

The only way to close that gap is for online retailers and others to start collecting sales tax, said Betty T. Yee, a member of California's Board of Equalization.

"There seems to be a groundswell of activity by other states that suggest that the time is right," she said.

Eliminating the tax gap would provide more than enough money to offset proposed cuts to California's universities or to its programs for the developmentally disabled. But Ms. Yee said any law would most likely be challenged in court and would therefore be unlikely to lift state revenue for some time.

Amazon collects sales tax in only five states - Kansas, Kentucky, New York, North Dakota and Washington - where it has offices or another physical presence.

It avoids collecting in several other states where it has warehouses by assigning their ownership to a subsidiary. Until the tax dispute in Texas, Amazon had encountered few problems with that arrangement.

Now, though, as Amazon seeks to open warehouses in South Carolina and Tennessee, it is also pressing for specific legislation to exempt it from collecting sales tax, using the jobs created by the facilities as leverage.

But the company is running into some resistance. For example, in Tennessee officials canceled a hearing last month about adjusting tax rules after the governor imposed a 45-day moratorium on new regulations. In South Carolina, legislation that had exempted Amazon from collecting tax has expired; it is unclear whether it will be renewed or not.

"The governor is taking a hard look at the issues surrounding Amazon," said Rob Godfrey, a spokesman for South Carolina's governor, Nikki Haley. "Economic development and job creation are two of her highest responsibilities and priorities, and while the governor wants to make sure we keep promises made to companies, she also wants to make sure we are being fair to the companies that we already have in this state."

Amazon's fight in California, as in Illinois and other states, revolves around its affiliates. Lawmakers are trying to broaden the definition of physical presence in the state to include partner sites of all retailers, not just Amazon.

Amazon's response in California, as in other states, has been to threaten to sever ties with affiliates if such laws are passed. In that way, the company can circumvent any sale tax requirements.

It took the first step to carry out the threat in Illinois last week, saying it would eliminate its affiliate program there on April 15. Amazon has previously dropped affiliates in Rhode Island, North Carolina and Colorado under similar circumstances.

George Runner, a member of California's Board of Equalization, which collects several kinds of taxes, said changing tax laws would end up hurting Amazon's 10,000 affiliates in the state. Amazon would simply continue selling products directly from its Web site or through out-of-state affiliates, without having to collect tax on the government's behalf, he said.

California would end up with no extra money, Mr. Runner said, despite predictions otherwise. In fact, it may get less considering the financial damage done to Amazon's affiliates.

"If the argument is revenue, we don't believe it will happen," Mr. Runner said.

Amazon is challenging the legality of a New York law enacted in 2008 that requires it to collect taxes based on its affiliates. The case is currently in the state appeals court.

Meanwhile, New York collected $70 million in sales tax from online retailers, including Amazon, for fiscal year 2009-10, according to the state Department of Taxation and Finance.

Despite its protests to collecting the sales tax, Amazon supports a streamlined system simplifying the current hodgepodge of state and local levies. But a streamlined system, which has the support of two dozen states, requires Congressional action.

Traditional retailers like Sears, Barnes & Noble, Best Buy and Wal-Mart applaud efforts to require Amazon to collect sales tax. They call it a matter of fairness because their stores do.

"I think it puts all retailers at a disadvantage," William R. Harker, senior vice president at Sears Holdings, said of Amazon's sales tax obligations. "What we and other retailers are looking for is for the playing field to be level."

http://www.nytimes.com/2011/03/14/technology/14amazon.html?_r=1&src=busln

 

 

Amazon Takes Action in Illinois as War on Sales Taxes Continues

By STU WOO

Amazon.com Inc.'s battle with state governments over sales taxes is escalating.

The online retailer on Thursday took action in Illinois, as it had threatened to do, to counter a new law aimed at forcing online retailers to collect sales taxes in the state. Hawaii, North Carolina and Rhode Island have enacted similar laws, and California is weighing action. Amazon is also in a court battle with New York over such legislation.

The Illinois law, signed by Gov. Pat Quinn Thursday, requires online retailers that work with affiliates in the state to collect sales taxes on purchases made by Illinois residents and businesses. Amazon responded to the measure by cutting ties to its Illinois-based affiliates, which are blogs and other websites that refer traffic to Amazon's website and get paid commissions if customers make purchases there.

Amazon, which is based in Seattle, has fiercely opposed all efforts to force it to collect sales taxes. "We had opposed this new tax law because it is unconstitutional and counterproductive," Amazon said in its letter to Illinois affiliates. "We deeply regret that its enactment forces this action."

The Amazon action has little impact on Illinois consumers. They can continue to buy directly from the company as well as pass through affiliate websites to reach its website, without Amazon collecting sales tax. But Amazon's payments to those websites will be halted.

Illinois has about 9,000 affiliates, said Rebecca Madigan, director of an affiliate trade group called the Performance Marketing Association. She said the Illinois affiliates generated $611 million in advertising revenue in 2009 and tax revenue of $18 million. She estimates that the state will lose 25% to 30% of that tax revenue because the affiliates will lose business, cut jobs or move out of the state.

"It has a devastating impact," Ms. Madigan said of the new Illinois law.

Gov. Quinn had argued that the law would "put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace." Representatives for the Gov. Quinn couldn't be reached for comment after Amazon's move.

A 1992 U.S. Supreme Court ruling said that retailers have to collect sales taxes in a state only if they have a substantial physical "nexus" there. The new Illinois law established marketing affiliates as nexuses. Amazon has referred to these affiliates as "advertisers."

Amazon's stance against collecting sales tax has drawn the ire of brick-and-mortar retailers, who complain the company has an unfair business advantage over rivals that collect sales taxes. Meanwhile, lawmakers have become more determined to make the online giant collect taxes to help address budget shortfalls that have become big problems for many states.

Over the past two years, officials in several states have tried different tactics to try to compel Amazon and other retailers to collect sales taxes. New York, Hawaii, Rhode Island, North Carolina and now Illinois have passed laws that require online retailers with marketing affiliates in their state to collect sales taxes.

The company is collecting sales tax in New York, while continuing to fight the legislation in court, as well as in Kansas, Kentucky, North Dakota and Washington. Most of the remaining 45 states require customers to report what is known as a "use tax" on out-of-state purchases, but few people actually do.

California legislators are also considering enacting similar legislation. Amazon said Thursday that it will drop California affiliates if the law passes, as the company has previously warned.

Brick-and-mortar retailers-many of which have been seeking to pursuade Amazon affiliates in Illinois and other states to work with them instead-had praised the Illinois law. "

Gov. Quinn has taken a bold step today to help level the playing field for retailers in Illinois," said Sandy Kennedy, president of a trade group called the Retail Industry Leaders Association. "Whether a sale happens in a store or online, the sales tax collected should be the same. It's time to end the special treatment given to online-only retailers."

Members of this retail association include Wal-mart Stores Inc., Best Buy Co. and other big-box retailers.

http://online.wsj.com/article/SB10001424052748704399804576193212782052704.html

Our View: Quinn should sign online sales tax bill

Many people love shopping online. You can buy a new pair of shoes without ever changing out of your pajamas. You can find a lot of bargains with just a few clicks of a mouse, and many companies offer free shipping.

If you live in Illinois, and the place you buy from does not have a physical presence in the state, you can avoid paying sales tax.

That creates an unfair advantage for those who do business in cyberspace. Target, Wal Mart and other retailers with buildings in the state are required to add sales tax; those who don't have a store you can walk into are not required to charge sales tax.

A bill that is awaiting Gov. Pat Quinn's signature will change that. The Main Street Fairness Act requires businesses with a selling presence in Illinois - physical or online - to collect at least the state's 6.25 percent share of sales taxes.

Quinn could sign the bill by Friday, or he could let it sit and it will become law anyway.

It's important to remember that this is not a new tax. Illinoisans are supposed to pay sales tax on online purchases whether the business they are dealing with charges them or not.

Because you're liable for those taxes and may not know it, under legislation passed last year the state has offered a sales tax amnesty. If you made a purchase online, over the phone or via mail and didn't pay sales tax between June 20, 2004, and the end of 2010, you can pay what you owe without penalty before Oct. 15.

Sales tax revenue that is legally due to the state is not being collected, and many Illinoisans are breaking the law and don't even know it.

It would be easier if everyone played by the same rules. It would be better for you to pay the taxes upfront than face tax evasion charges later.

This bill is fairer for consumers and for the businesses that build and pay taxes here. We encourage the governor to sign the bill.

Quick thoughts

DEATH PENALTY: Gov. Quinn did sign an important piece of legislation Wednesday; he abolished the death penalty in Illinois. The death penalty has been in limbo since 2000 when former Gov. George Ryan imposed a moratorium. He did so because 13 inmates had been released since 1977 because of wrongful convictions. We agree with Mark D. Hassakis, Illinois State Bar Association president, when he says if "an innocent person is put to death, that would be the grossest miscarriage of justice imaginable."

MEMORIAL HALL: We hope the Illinois General Assembly agrees to give Winnebago County-owned Veterans Memorial Hall permission to serve alcohol. It probably won't be a big moneymaker, but anything that can add a few dollars to the county's coffers and bring more people to the museum is a good move.

FIRST AMENDMENT: The U.S. Supreme Court last week reinforced what we have known for years: The First Amendment protects speech we find abhorrent. The high court upheld Westboro Baptist Church's right to conduct protests near military funerals. Those protests, which include signs that say "Thank God for dead soldiers," are distasteful. However, no matter how reprehensible we find their words, we should be thankful we live in a country where free speech and free expression are permitted and encouraged.

Copyright 2011 Rockford Register Star. Some rights reserved

http://www.rrstar.com/carousel/x13265194/Our-View-Quinn-should-sign-online-sales-tax-bill

Mercury News editorial: California should end online sales tax break

California can no longer afford to give Internet businesses the sales tax break they've enjoyed since e-commerce burst onto the scene in 1991.

Gov. Jerry Brown didn't include an online sales tax as part of his plan to close the state's $25 billion budget deficit. He should. The state estimates that California could collect as much as $300 million a year if the Legislature passes Oakland Assembly woman Nancy Skinner's AB 153, which closes the loophole on Internet sales taxes. The revenue could save the jobs of thousands of law enforcement officers and teachers.

The Assembly Revenue and Taxation Committee debated Skinner's bill at length before placing it on hold Tuesday in anticipation of a formal vote in a few weeks. This is not about levying a new tax. By law, Californians are legally obligated to calculate the sales tax for their online purchases and send the payments to the state. But -- well, how many of you do that? Many people don't know they're supposed to, and others know nobody's going to come knocking on their door with an arrest warrant.

Like Skinner, we believe a federal solution to this nationwide problem would be ideal, but it's a long way off. Only 24 states have signed on to the national Streamlined Sales Tax Project, the most promising effort; even California has not joined, although it should. Nationwide collection would likely mean $1 billion a year for the state.

Skinner's bill offers the next best option to end the competitive disadvantage suffered by local retailers, who have to charge taxes, and to give cities, counties and the state the revenues they are entitled to by law. A California law also could jump-start federal reform.

Twenty years ago, it didn't matter much whether companies such as Amazon collected sales tax. Amazon took in about $150 million in revenue in 1997. By 2010 it brought in $34 billion, a lot of it at the expense of local stores.

Amazon is threatening to drop its 10,000 California affiliate sellers if the Legislature approves the tax. The smart money says it's bluffing, but if not, its affiliates will have plenty of options.

Best Buy, Sears, Barnes and Noble and Target all have said they would gladly take over Amazon's lucrative online business in the state. Silicon Valley has plenty of entrepreneurs who surely can find a way to make a profit and still pay the sales tax on online sales. It's not as if Amazon is sponsoring any South Bay Little League teams or helping California schools make ends meet, like local companies do.

One of the reasons for California's budget deficit is that sales tax revenue plummeted by more than 15 percent during the recession. That's partly because people are spending less but also because they're seeking online bargains, sometimes after seeing products in local stores. Revenues are improving in 2011, but the trend toward online is unlikely to reverse.

The Legislature passed an online sales tax bill in 2009 and 2010 only to see Gov. Arnold Schwarzenegger veto it. Brown should tell the Legislature he's ready to put local businesses on a level playing field with their online competitors.

http://www.mercurynews.com/opinion/ci_17568293?nclick_check=1

 

 

Thursday, January 20, 2011 at our Executive Board Meeting, MnRA President Brian Steinhoff presented outgoing Chairman of the Board Jeff Lindoo of Thrifty White Pharmacy with a plaque of recognition for his year of service to MnRA.

 

 

 

 

 

MnRA President Brian Steinhoff along with the other co-chairmen of Hunting Works; Marshall Area Chamber of Commerce Executive Director Cal Brink, Ron Schara, Greg Larson, owner of Ace Hardware in Redwood Falls, and Mark Johnson, executive director of the Minnesota Deer Hunters Association as featured in Tuesdays edition of the Marshall Independent paper.

Read full article

 

 

Black Friday Hits Minnetonka

Shoppers hit the Ridgedale retail district on Black Friday.

By Katelynn Metz | November 26, 2010

 

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President Brian Steinhoff interviewd on KARE 11 News

MINNEAPOLIS -- The snow may have just started falling, but already, the Christmas shopping season is in full swing.

Experts say retailers are rolling out the deals early this year to meet customer demand for bargains and a good shopping environment.

"I think you're going to see less crowds right now. So they can benefit that way. There's some good offers out there right now," said Brian Steinhoff, President of the Minnesota Retailers Association.

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Tony Chiappetta and the Team at CHIPS, one of MnRA's RetailPlus+ Partners, is recongnized as a Top-Performing Partner of Global IT Innovator a the 2010 Partner Summit.

The honor was presented to CHIPS' President Tony Chiappetta by Nable's CEO Gravin Garbutt and Vice President of Sales Mike Cullen during an awards dinner at the N-able 2010 Partner Summit in Scottsdale, AZ.

 

Click Here to Read Press Release

 

 

For a copy of the Director of New Director of Government Relations Job Posting Click Here

President Brian Steinhoff is CO-CHAIR on the Board of Hunting Works for Minnesota Partnership

There will be a Press Conference, Tuesday, October 26, 2010, 10:30 am to 11:00 am

BLOOMINGTON, Minn. - It may not be Halloween yet, but retailers are busy getting ready for Christmas.

Brian Steinhoff says last year roughly 40 percent of shoppers started Christmas shopping before Halloween. This year holiday sales are expected to increase 2.3 percent nationally.

Steinhoff says retailers are cautiously optimistic and stocking shelves slightly less so they don't get stuck with items they can't sell.

Sandy Kalczynski is the owner of Callisters Christmas store located on the third floor next to Nordstrom's in the Mall of America. Kalczynski says she's noticed wholesalers have leaner stocks to pick from. She opened her store on October first and says sales are already up compared to the last time she brought her temporary store to Mall of America two years ago.

Shoppers we talked still plan to look for discounts. Steinhoff depending on the retailer some stores will prepared to offer deep discounts in order to compete for customers others start with a lower base price. Either way, Steinhoff expects shoppers will see lots of good deals.

See Video

By: Rick Segel

If you are a regular reader of this column you are beginning to better understand that there is truly is a revolution taking place in marketing today. There is an explosion of ideas coming to market. But it's more than just the number of ideas-- it is the speed in which these ideas become accepted and used by large numbers of our marketing audience.

The days of saying, "We do it this way", or "Why fix it if it's not broken" are no longer a part of a marketer's vocabulary. Then you add one more element to the mix of quantity of ideas, the speed of acceptance, and universal use --the cost. Most of these ideas are either low cost or no cost but do require commitments in both time and education.

The bottom line is that we reach people differently today. Consumers have new buying habits and ways in which they receive information about the products and services they seek. The following is my list of The Seven Breakthrough Marketing Tools we need to know in order to compete in this overcrowded marketplace:

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MnRA President, Brian Steinhoff, was interviewed by Mark Zdechlik for the MPR - Humphrey Poll

Maplewood, Minn. - You may not have money problems, and still have your job. But you probably know plenty of people who are struggling.

The latest MPR News-Humphrey Institute poll shows the tough economy is hitting Minnesotans hard and has changed the way many spend money. The poll shows that 94 percent of likely voters think the nation's economy is in fair or poor condition. A majority say their own finances are fair or poor.

The new poll found 54 percent of Minnesota households are distressed because of the economy, 56 percent are not going to restaurants as much as they used to and 55 percent are shopping for less expensive groceries to eat at home.

It's not hard to hard to find people who are scraping by.

Read On

 

MINNEAPOLISRetailers to Add Thousands of - Some retailers are adding thousands of positions in the next three months. This is good news for the millions still out of work after the recession.

VIDEO President of the Minnesota Retailers Association says hiring plans have already started.

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To all members of the Minnesota Retailers Association:

I am VERY please to announce that the search committee has completed our search and Brian Steinhoff has accepted the position of MNRA President. Press Release.

We had an outstanding group of candidates and Brian rose to the top of the group for the entire search committee. We are very please to have him begin his duties on September 15. Brian comes to us with an outstanding set of skills and experience and we are looking forward to working with him to continue to move our association forward as the premier association representing retailers in the state of Minnesota.

Thank you to all who participated in this important process for our association!

President Buzz Anderson Interviewed on Fox 9 regarding Retail Sales Up in February 2010

View Video

Speaker of the House, Margaret Anderson Kelliher (DFL), Minneapolis, made a personal visit to Minnesota Retailers Association Member, J&J Powersports of Faribault on October 12th. The Speaker responded to an invitation from owners, Joe and Jake Portinga, who made the request earlier to their state legislator, Rep. Patti Fritz, D, Faribault.

Of the visit, Joe Portinga, said, "We were so pleased to have a visit by the Speaker. It gave me the opportunity to talk to her personally about the need for a Motor Sports and Marine Dealer Protection law in Minnesota. Her visit shows that she is concerned about our dilemma and is willing to work with us at the Capitol to provide some of the same protections to Minnesota Dealers that others have in all of the surrounding states."

The visit to J & J Powersports followed a meeting on October 5th, 2009, between MnRA's Motor Sports and Marine Dealer Committee and Speaker Anderson Kelliher regarding House File 1157, the proposed Dealer Protection law authored by Rep. David Dill. At that meeting, committee members were able to have a dialogue with the Speaker about the need for a Dealer protection bill in Minnesota.

The Speaker was joined on the visit by Rep. Denise Dittrich (DFL), Champlin, along with the local state representative for J&J Power Sports, Rep. Patti Fritz (DFL). All three legislators later attended a small business task force meeting in Faribault after the tour of J&J Power Sports.

(Photo from left to right: Speaker Anderson Kelliher, Joe Portinga, Rep. Patti Fritz, Rep. Denise Dittrich, Jake Portinga)

 

 

The Minnesota Retailers Association has joined with a number of other Associations and companies in a lawsuit against the state of Minnesota that was filed on October 2nd in U.S. District Court. The complaint against the state of Minnesota asks the Court for an injunction and declaratory relief as a result of recent reductions in reimbursement to pharmacy for Medicaid patients.

In lay terms, the intent of the lawsuit is to establish that the conduct of the state of Minnesota in reducing the average wholesale price based reimbursement of single-source drugs by 5% under the Medicaid program is unlawful.

Click here to view the Complaint

Click here to view the Press Release

The state of Minnesota passed a huge health and human services funding bill during the 2009 legislative session. On page 150-151 of a 400 page bill, a somewhat little known provision was added that obligates employers and plan administrators, who are required to also provide notice of the federal COBRA subsidy under the American Recovery and Reinvestment Act of 2009, to also include information about the Minnesota COBRA Premium Subsidy to qualified individuals residing in Minnesota beginning July 1, 2009.

Minnesota will subsidize eligible employees for 35% of their monthly COBRA payment IF:
1. the employee signs up for COBRA health care coverage;
2. the employee is eligible for the federal COBRA subsidy; and
3. the employee meets the income and asset limits for a Minnesota health care program.

The Legislature did not address some of the concerns about this provision, which was contained in the health and human services omnibus budget bill and was signed into state law. The new law can be found here: Laws of Minnesota 2009, Chapter 79, Article 5, Section 78, effective July 1, 2009.

Some organizations communicated their concerns to the Department of Human Services (DHS) and worked with officials as they drafted an implementation plan for the provision.

Some self-insured employers and plan administrators contend that this notice requirement may be preempted by ERISA. Nevertheless, self-insured employers and plan administrators may choose to voluntarily comply with the requirement. (This is not intended as legal advice; please consult with an attorney).

The DHS has drafted model notice language that can be used by employers and plan administrators to comply with the notification requirement. DHS recommends this notice be included with all COBRA notice mailings. Employers and plan administrators can write their own notice using language from the model version. For more information, including the model notice language, please visit the DHS website on the subsidy here.

DHS is advising individuals that this subsidy does not change their COBRA rights and responsibilities, including election period or payment of premiums period. DHS advises individuals with pending applications to pay applicable premiums. Once an application is approved, DHS will authorize the Minnesota Department of Management & Budget (formerly the Department of Finance) to pay the appropriate premium directly to the entity to which an individual would have paid his/her COBRA premium.

In DHS's fiscal note on the bill language, they assumed that the subsidy is not available to those who have begun to pay for COBRA coverage prior to the enactment of the legislation, July 1, 2009.

Please let the Minnesota Retailers Association know if you have any additional questions or concerns with how DHS intends to implement this provision by contacting us at (651) 227-6631 or mnra@mnretail.org.

A dream came true recently for 36-year-old Daron Van Helden of Burnsville.  He scored a hole-in-one at MnRA's 11th Annual Legislative Wrap-Up Golf Event on June 11th at Prestwick Golf Club in Woodbury.  Van Helden, Executive Director of the Burnsville Chamber of Commerce, hit the ball 171 yards on a par 3 with a 9 iron.  It landed on the green just past the pin with enough backspin to roll right in.  For his feat of strength and skill, the Burnsville Executive took home a black Yamaha V-Star 1100 motorcycle valued at over $9,000.