Local business owner lobbies for Internet sales tax

North Suffolk businesswoman Alison Dodson Anderson, of A. Dodson’s on Bridge Road, visited Washington last week in an attempt to close a tax loophole benefiting online retailers.

Traveling with a group, Anderson represented the Hampton Roads-based Virginia Retail Alliance, whose board she sits on. Virginia’s Sen. Tim Kaine, Sen. Mark Warner, U.S. Rep. Randy Forbes and U.S. Rep. Bob Goodlatte were targeted, she said.

At stake, Anderson says, is public money to support local communities and fund positions like teachers, police officers and firefighters.

“What we are fighting for (is), you are taking away from Main Street America, because you are selling online” but not collecting sales tax for the state that the customer resides in, Dodson said.

“It goes to our local roads and hires teachers, hires firemen, hires policemen. You need to support your government in order to support your community.”

The Virginia Retail Federation, the advocacy arm of the alliance and the Richmond-based Retail Merchants Association, fought to have Amazon collect Virginia sales tax for sales to Virginia residents — a bill passed by the 2012 General Assembly — and is now fighting for support of The Marketplace Fairness Act.

The federal act, which essentially would extend the law enacted by Virginia to all states, was passed by the U.S. Senate on May 2013 “with a very bipartisan vote of 69-27,” including support from 21 Republicans, according to the federation.

But it’s now stalled in the House Judiciary Committee, the federation reports.

As often occurs in Washington, the situation has grown complicated.

Acknowledging “an underlying problem of fairness facing local businesses,” Goodlatte, who chairs the committee, has refused to hear the Senate bill, saying that the House plans to address the issue with its own legislation, according to the federation.

In September, the committee released seven “basic principles” any legislation would need to address.

The concerns include that taxing online sales in such a way could create a new tax “not faced in the offline world,” as well as unequally burden online retailers, which would have to take extra efforts to collect and remit taxes.

There’s also a “no taxation without representation” argument: Online sellers, the committee argues, would not be represented in the legislatures of almost all the states they were collecting for.

According to the federation, Goodlatte wasn’t happy with the outcome when, at his behest, U.S. Rep. Jason Chaffetz modified the Senate bill to conform to the seven principles.

Goodlatte subsequently formulated his own plan, with a “hybrid-origin sourcing scheme.”

For instance, selling to a Virginia customer, Goodlatte would have the California retailer collect California sales tax and remit it to the California Department of Taxation, which would remit a portion to a “quasi-governmental agency” that would redistribute it back to Virginia, according to the federation.

States without a sales tax would either be assigned one by the federal government for Internet purchases, or online retailers would have to report back to a customer’s home state, which then would be responsible for any tax collection.

Last year, Goodlatte criticized senators for not routing the Senate bill through the appropriate Senate committee with expertise to refine it.

“I do not believe the Marketplace Fairness Act is sufficiently simplified yet,” he stated in a news release. “While it attempts to make tax collection simpler, it still has a long way to go.”

But Dodson said collecting state sales tax requires a simple software plug-in. “If you are smart enough to have an online store, you are smart enough to download the tax software,” she said.

She noted that as more and more retail sales move online, delivery trucks will increasingly travel local and state roads. “That’s more police and firemen required to take care of them if they get in a wreck,” she said.

If the House doesn’t pass the Senate bill this session, Anderson says, it’ll be back to the drawing board.

“I don’t by any means see Amazon as the enemy,” said Anderson, who reports that one-sixth of A. Dodson’s business is online.

“We even sell on Amazon. What we want is a completely level playing field. Just because you don’t have a bricks-and-mortar store doesn’t mean you shouldn’t pay sales tax.”