Quotes by Steve Womack: Sales and Use Tax: Marketplace Fairness Act

Steve Womack Regarding Sales and Use Tax

STEVE WOMACK has been the U.S. Congressman for Arkansas’s 3rd congressional district since 2011.  He assumed office on January 2, 2011.  Prior to his election to Congress, Womack was Mayor of Rogers, Arkansas since 1999. At some point he also worked as a financial consultant for Merrill Lynch. (Source Wikipedia)

David Welch wrote an article that appeared at Bloomberg.com.  WOMACK told him that the online tax bill took shape after a conversation with top Walmart executives in January of 2011. WOMACK had asked Walmart what issues were important to them. Walmart told WOMACK that they wanted him to seal up the loophole that allows online retailers to sell goods without a sales tax.

On July 24, 2012, Arkansas News reported that WOMACK said he rarely makes online purchases but confesses that before coming to Congress he wasn’t very vigilant about paying the sales and use tax.  “I hadn’t always done that,” he said. 

  • Note:  He was the Mayor of Rogers, Arkansas for 12 years and had worked as a financial consultant. Only after he assumed federal office and met with Walmart executives (all during January 2011) he found it necessary to be vigilant on paying his “use tax.”

On June 28, 2013, Womack’s official U.S. Congressional website shows, “Today, in the state of Arkansas, if you buy something online and the retailer does not collect the sales tax, current state law requires you to pay that tax to the state yourself. That’s the law! That’s confusing and burdensome, and let’s be honest, even though not doing so is tax evasion, very few people are going to save up receipts all year to send in their unpaid sales tax.” – ” I’m a proud conservative and have always stood for lower taxes and limited government. But in my book, protecting special-interest loopholes and encouraging tax evasion isn’t conservative; it’s foolish.

  • Note: Prior to coming to Congress WOMACK said he did not pay his “use tax.”  After he gets into Congress and meets with Walmart executives he says, “encouraging tax evasion isn’t conservative; it’s foolish.”

On September 18, 2013, Womack’s official U.S. Congressional website shows ,”For over twenty years, this tax loophole has forced more and more of the small businesses that line our Main Streets to shut their doors.”

  • Note: WOMACK was the mayor of Rogers, Arkansas since 1999.   He said that before coming to Congress he wasn’t very vigilant about paying the sales and use tax.  “I hadn’t always done that,” he said.  (Arkansas News).

According to opensecrets.orgWalmart was a major lobbying force behind the Marketplace Fairness Act (MFA).  This is legislation that WOMACK is the lead sponsor for in the House of Representatives that will purportedly close the “loophole” if it becomes law.  In 2012 Walmart spent millions of dollars lobbying our lawmakers for change in the retail industry.  WOMACKS’ campaign and many other lawmakers received huge campaign contributions from Walmart, other big box stores, and other related sources for the 2011-2012 election cycle.

Here are a few tweets worth reading:

 

My Opinion

It wasn’t until Walmart executives told WOMACK to close the so called “loophole” that he found it necessary to pay his tax obligations.  The “loophole” he refers to is the U.S. Constitution Commerce and Due Process clauses.  Prior, he was the mayor of an Arkansas city and apparently had merchants on his own main street that were purportedly closing down due to the lack of people paying their “use tax.”  I think WOMACK’s new tone on paying “use taxes” is merely political posturing after big money met with him and asked for his help to stifle the competition.  The “use tax” issue was not “really” impacting main street as he alleges, it was impacting Walmart.

It sounds to me that “use tax” is a new tax for WOMACK starting in 2011.  He apparently never paid them before 2011 based on the articles I have read.

As the mayor, if it was really impacting “main street” one would assume that WOMACK would have paid his “use tax” to help his local businesses out.  The MFA is NOT about “main street.”  It is a payment owed to Walmart for funding WOMACK’s election through campaign contributions.

Please note anything I write about is my expressed opinion based on what I have been reading in articles or based on my own experiences. I might be wrong. If you think I am wrong about something feel free to post a response. I will allow arguments on both sides of any article.

Scott Rigell It IS a Tax Increase in Minnesota and Missouri: Marketplace Fairness Act

I copied this statement from U.S. Congressman Scott Rigell’s Facebook Page:

“We appreciate the calls and comments our office has received with concern for Rep. Rigell’s support of the Marketplace Fairness Act. Though it’s been inferred, this bill does not create a new tax on hardworking Americans; it simply enforces… the existing sales tax laws. Currently, states are not allowed to collect online sales tax from retailers at the point of sale. Instead, some states – like Virginia – require residents to file Form CU-7 along with their income taxes so that the state can collect sales tax on internet or catalog purchases. The Marketplace Fairness Act removes this unnecessary tax provision and levels the playing field for small businesses by ensuring that their online competitors are facing the same tax requirements as they do.Rep. Rigell supports the basic principles established by the House Judiciary Committee that stress tax relief, simplicity, states’ rights and privacy rights.” 

Scott Rigell, please explain how the information I provided below “does NOT create a new tax on hardworking Americans” in Minnesota and Missouri?

Did you know that Missouri allows you to purchase up to $2,000 a year in out of state online and catalog orders and NOT pay “use tax” on the purchases. Here is a link to Missouri’s Business Portal.  Missouri rules specifically shows:

  • “If you have made cumulative taxable purchases of less than $2,000 this calendar year, check the box which states: “I do not have cumulative taxable purchases totaling more than $2,000 this calendar year” and file the return.  You would not owe consumer’s use tax at this time.  Consumer’s use tax is only due on the total purchases once you have exceeded $2,000 in a calendar year.”

Minnesota also allows a person to exempt up to $770 a year in non taxed out of state purchases made online from paying “use tax.”  Source State of Minnesota.

Conclusion

Therefore, Minnesota ($770) and Missouri ($2,000) both have thresholds where no “use tax” is owed on non-taxed purchases. If MFA becomes law all of the non-taxed online purchases made today will have a NEW tax tomorrow. There will be no-way to determine if a purchaser has exceeded their threshold they are allowed under their State laws. IT is a tax increase in some states.

I sell online and have customers that buy from us each month from Missouri. If the MFA becomes law I will have to start charging them a tax on something they NEVER had to pay a tax on before. Sounds like a tax increase to me.

Also your Facebook Page shows, “and levels the playing field for small businesses by ensuring that their online competitors are facing the same tax requirements as they do.”  I think you do not really understand who is behind it his legislation or choose not to really acknowledge it due to political backlash  On April 10, 2011, Al Norman wrote an article (read the article) that appeared on Huffingtonpost.com. He points out that the entire issue of internet sales taxes is a battle between Walmart and Amazon.com.  Big box stores did not think it was fair that Amazon had an advantage over them in retail sales.  It has nothing to do with helping “mom & pop” businesses.

 

The Marketplace Fairness Act: Welcome to this great VIRTUAL nation.

Originally posted on Marketplace Fairness Act:

Welcome to the United States.  On behalf of the President of the United States and the American People, we welcome you to this great VIRTUAL nation.  Your VIRTUAL presence is welcome here.  You no longer have to come and have “physical presence” here to share in the American dream. A portion of this language comes from WelcometoUSA.gov.

If the Marketplace Fairness Act becomes law sales taxes will have to be collected by merchants that have a physical presence in the United States of America that are engaged in “remote sales.”  An example would be a business with physical presence (a warehouse or store) in Minnesota that sells a product “remotely” to a person in New York.  The Minnesota business would be required to collect the sales tax from the person in New york, and then submit the sales tax to the State of New York.

This made me think about how this will impact income…

View original 519 more words

Marketplace Fairness Act: Where are the Mom & Pop Stores?

Originally posted on Marketplace Fairness Act:

Where is the mom & pop retail store?   It is kind of like saying, “Where is Waldo?”  The Waldo books depict many people doing a variety of amusing things at a given location. Readers are then challenged to find a character named Waldo hidden in the group ( Wikipedia ).  I looked around my city and tried to find mom & pop.  They are even harder to find than Waldo.

The general store is the mythical place that once existed on Little House on the Prairie. Harriet & Nells Oleson owned and operated Oleson’s Mercantile which was the only retail store in Walnut Grove, Minnesota. They are the type of business that people envision when they think of the mom & pop store. On a rare occasion in a small town in America you might still find one of these “real” mom & pop stores in existence.

The Marketplace Fairness Act (MFA) is being advertised by big business as the…

View original 467 more words

Wal-Mart Jilts the Consumer & Taxpayer: The Deception Behind the Internet Sales Tax

Thomas Carlson:

Old news is still relevant. This is why the Marketplace Fairness Act is currently being debated by our law makers. Thanks Walmart.

Originally posted on Marketplace Fairness Act:

To the Consumer and Tax Payer.  You are being LIED to.  You need to STAND UP & BE HEARD now!  Please note this is my expressed opinion based on what I have been reading in articles.

Marketplace Fairness Act Internet Sales Tax

The CONSUMER (you) have been DUPED into believing that the Marketplace Fairness Act (MFA), AKA Internet Sales Tax legislation is for the benefit of the small “Mom & Pop” retail stores on main street. The MFA is legislation that was bought and paid for by Wal-Mart (Walmart) and other big box campaign donations and lobbying efforts.  According to sopatrack.com (since this article was published the sopatack website has been down.  Here is a link to the cached version) the U.S. Senators received $52,872,918 in money supporting this legislation and $3,028,786 in money opposing it.

On April 10, 2011, Al Norman wrote an article (read the article) that appeared on Huffingtonpost.com. He points out that the entire issue of internet sales taxes is a…

View original 911 more words

Best Buy: Internet Sales Tax Will Just Inflict MORE Pain

I responded to an email from Best Buy today. They asked me to post an email response to my blog post titled, “Best Buy’s Joly Actually Tells Congress Why NOT to Pass the Marketplace Fairness Act.”  I attached their email to the article.  Click here to read the article and response.  After I posted their response I had one follow-up thought and emailed them this information:

Kim Unloading a 20' Cointainer All-By-Herself. It  took her about 6 hours.

Kim Unloading a 20′ Container All-By-Herself.  It took her about 6 hours.

“Attached is a photo of my wife unloading a 20′ container of product all by herself.  I could not help and the kids were in school.  In August I was hospitalized after I fell and completely tore my left quad tendon off.  I was on the road to recovery and slipped on December 9th and tore my quad tendon off again and broke my knee cap.  On December 30, 2013, I was hospitalized again for a third surgery after I got staph infection.

My wife basically ran the entire business from December to the end of January.  It included unloading a 20′ container, packing orders and taking phone calls.  This legislation is not what it appears to be.  It punishes small businesses like mine that wants to stay small.  We grew out of our basement.  We have no interest in hiring anyone and that is what this legislation will force us to do.  It might also make us downsize to stay below the million mark.
  • I urge Best Buy to support the legislation ONLY if it is simplified.  It is not simplified in its current form.  I have no problems collecting taxes but it truly has to be streamlined.  It is set-up now to crush many small businesses.”
Additional Information:
Here is what my knee looked like when the infection set-in:
Tom Carlson Infected Knee
TODAY I have recovered enough to pull my weight and work as a team-member with my wife.  I wear a leg brace for the next 2 months.  Hopefully I will have it off by June 2014.  Kim is an incredible woman and she has kept our business afloat during a real hard time.  Please do not Inflict my small businesses with more pain through paperwork and expenses.

Welcome To Delaware Sign: Home of Tax – Free Shopping

I thought this was interesting. When you enter Delaware they invite you in for Tax Free Shopping.  I wonder how the border states deal with the “use tax” evasion when people from their states run across the border to shop?  Maybe the Marketplace Fairness Act should require all brick & mortar stores to ask for ID’s to send the taxes back to each state where their customer is from.  This would help “level the playing field.” The government would not be “picking the winners and losers.”  It only fair, right?

Marketplace Place Fairness Act – The Real Impact of an Internet Sales Tax

Originally posted on Marketplace Fairness Act:

cropped-dsc04779

This is the Face of a Mom & Pop Internet Company that the Marketplace Fairness Act  (MFA) will Crush…

In 1999 I was employed as a Federal Agent.  I wanted to find a  way out of a career where I had supervisors and a job that controlled my life.  My wife had a Master’s Degree in Gerontology (the study of aging).  We saw the Internet as a new and exciting way to try to become entrepreneurs.  We created a company called Assisted Living Store, Inc., and started selling adaptive products that would assist the elderly and disabled to perform daily living activities easier.  It took us eight years until I was able to quit my federal job and pursue our Internet business full-time.  My wife had stayed at home during this time providing daycare services for others while raising our children.  We used the money from her daycare to fund…

View original 1,472 more words

Best Buy’s Joly Actually Tells Congress Why NOT to Pass the Marketplace Fairness Act

UPDATE:  Best Buy Officially Responded to my article.  I posted it near the end of this article.  I also posted my response to their official response as a rebuttal.

On April 15, 2014, the Minneapolis Star Tribune wrote an article titled, “Best Buy’s Joly calls for Congress to pass Marketplace Fairness Act.”  He stated that Best Buy’s top concern is e-fairness.  They want the Marketplace Fairness Act aka Internet Sales Tax legislation passed.

This map shows the locations of Best Buy Stores.

After reading the article one point stood out to me.  Hubert Joly said, “the electronics retailer’s stores are profitable, and 70 percent of Americans are within 15 minutes of a store.”  This means that Best Buy has physical presence (brick & mortar facilities) close to 70% of the American population.  They currently collect sales taxes in all of the states (that have sales taxes) where they have a brick & mortar presence.  Best Buy does not think it is fair that a small company like mine only collects sales taxes in Minnesota where we are physically located.  As an example, under the MFA they want me to collect California sales taxes for an item I ship from my location in Minnesota or any other state in which a sale is made by my company.

Why is Joly’s statement significant that “70 percent of Americans are within 15 minutes of a store?”

Since Best Buy has brick & mortar stores “close to 70% of Americans” they collect sales taxes in each state.  Best Buy employees get to vote locally; the sales tax money goes to fund schools; and it also funds roads and “other” services that benefit their employees and their physical brick & mortar location.  If there is any need for police or fireman to respond to their physical location they get the benefit of local services that they pay for through taxes.  If a shoplifter gets caught stealing they call their local police department.

Last fall I fell and was injured while working.  My company has a brick & mortar location ONLY in South Saint Paul, Minnesota.  I pay property taxes and collect sales taxes for orders shipped within Minnesota.  After I fell I called 911 and the local fire and police department responded to help me out.  I did not call 911 and have the police and fire department come from California or another state.  As a business owner in Minnesota I get no benefit from collecting taxes for a sale to a remote location.  I would be collecting taxes for another state where I have no representation.  The person buying the item has the legal obligation to make sure they reported the sales tax free transaction to their state and pay the “use tax.”  This is so they can benefit from their local services where they are physically located.  In my opinion states have done very little on educating people of their responsibility to pay their “use tax.”  If Best Buy does not think the system is fair they can always downsize the number of their brick & mortar locations and pay less in taxes.  I think Best Buy’s Joly actually told Congress why NOT to pass the Marketplace Fairness Act.  He just wants to “level the playing field” in favor of big business and bury a company like mine in paperwork.

Thanks Hubert for wanting to crush a real “mom and pop” businesses like mine.

By the way…I attempted to shop at your Woodbury location last Christmas.  I stopped in once to buy an X-Box.  I was told it was not in stock and that they recommended I stop in every morning right when they opened to see if one had come in.  I was told a lot of other people would be doing the same thing.  I then went home and bought it online from Amazon and had it in three days.  I stopped in another time last fall to buy a Canon lens for my camera.  I was told that you do not carry the high end lens I wanted but you could order it for me.  Instead of having your employee go through the online checkout counter for me I just bought it online from Amazon out of the comfort of my home.  By-the-way I did send my “use tax” return in to the State of Minnesota for these purchases.  What most people in Minnesota do not realize is that you can buy up to $770 a year in tax free items online and not report the purchases to the state. If you go over $770 you owe the “use tax.”  If Best Buy gets their way the MFA will eliminate the ability for a person living in Minnesota to buy up to $770 a year tax free.  Read my article titled, Internet Sales Tax is a Potential Tax Increase of $286,954,917.20 in MN.  By supporting the MFA Best Buy basically wants to raise taxes on the consumer in Minnesota that purchase remotely.  After wasting my time twice during Christmas shopping at your store I have come to the conclusion that I will never shop there again.

BEST BUY’s Official Response to My Post:

On Thursday, April 17, 2014 9:33 AM, “Furman, Matt” <Matt.Furman@bestbuy.com> wrote:

  • Please post this email as a response to your recent blog entry regarding Best Buy CEO Hubert Joly’s comments at the Minnesota Economic Club on April 15, 2014:
  • You recently posted to your blog and suggested that the federal e-fairness legislation pending in Congress would impose undue burdens on small businesses like yours.  There are two points that you may have missed.  First, small businesses with less than $1 million in out-of-state sales would be exempt from this law.  Second, any business required to collect sales tax from out-of–state sales would be provided the software necessary to do this — free of charge.  For these two reasons your conclusion that Best Buy, or any of the 30,000 or so retailers that support this effort, is interested in harming small businesses is simply not supported by the facts.
  • The laws concerning sales tax collection were written long before the Internet was invented.  It is time for Congress to update them and allow states to make decisions about whether to collect tax on these kinds of sales.  Until then, companies of all sizes, maybe even yours or those owned by your friends, family or neighbors, are at a structural disadvantage to the Internet-only retailers.  That must change.
Matt Furman
Best Buy spokesman

 

Matt, Thank you for the email.  

  • My 2 person company (just my wife and I – no other employees) exceed the $1 million threshold.  We ARE a small company please stop in and visit with us and I would be happy to provide you with a tour.
  • The free software that you speak of does come with costs.  I have to install the software on 5 separate websites.  This will cost me time and money.   Approximately 40 percent of my sales are to tax exempt organizations.  The free software does not come with online “real time” exemption software.  An email from Avalara said it would cost me $3,000 plus fees.  Here is a link.  If I want to use the manual method they do offer that but it would be a nightmare to track it manually. Today I only have to deal with sales tax and exemption certificates for one state.  I fear audits from other states.  Since a large percentage of my customers are non-profits I would have to collect the exemption certificates for all out-of-state exempt sales.  I do not need to do this today under the current tax system.  This is more time and money for my wife and I to spend on paperwork.
  • We will incur an additional $1,380 or more in credit card fees for processing sales taxes for states where we have no physical presence or representation.
  • Telephone orders and mail orders come in from many elderly customers.  If the sales tax is calculated incorrectly on a mail order I would have to cover the difference out of my pocket.  The process of calculating sales taxes on telephone orders might be a simple process for a big box store.  However, my wife or I would need to determine the taxability of each product during our phone order process.  We understand Minnesota’s requirements because we live here.  An order with 10 different items might have taxed and non-taxed items based on where the item is being shipped.  Some destinations add sales taxes to shipping and some do not.  It would be confusing and extend a simple 5 minute call into a 10 minute call.
  • Nothing is free.  Free software needs maintenance and someone to hook it up and maintain it.  I will need to recode all of my products for taxability.  I think someone said free software is like a free puppy.  It still needs it shots, walks, food, and owners energy to keep it alive.
  • States should merely educate people on “use tax” requirements.  It could be as simple as having a  federal law that requires all “remote sales” to include a few lines about “use tax” requirements on the order.
  • The only companies that will really benefit from this legislation are the ones that have physical nexus everywhere.  The small mom and pop stores you mention in your email are merely grasping at straws as to why they are failing.

Sincerely,

Tom Carlson

 

Walmart Pockets $73 Million of the Sales Taxes We Pay Annually

Skimming the Sales Tax: Walmart Keeps a Cut of the Sales Taxes We PayToday I discovered an article online titled, “Shifting the Burden for Vital Public Services: Walmart’s Tax Avoidance Scheme” by Philip Mattera, 2011, Good Jobs First, Washington DC.  I took the picture above from their article.  The article shows that some retailers legally can skim or keep a portion of what they collect in sales taxes on behalf of state and local governments. At the time they wrote the report about half of the states allowed skimming.  Mattera says, “The legal practice, known by terms such as “vendor discount” and “dealer collection allowance,” is essentially a service fee meant to compensate store owners for the time and trouble of recording sales tax collections and remitting them to revenue agencies.”  They concluded that Walmart accounted for the “diversion of about $73 million in state or local sales tax revenue each year.”

The organizations behind the Marketplace Fairness Act (MFA) aka Internet Sales Tax continually say we need to “level the playing field” so that tax collection is fair for everyone.  The “government should not be picking the winners and losers in retail.”  NOTE: Not all states allow skimming.  This means some state governments are “picking the winners and losers.”  I could not find where my state allows a revenue share (subsidy) on sales taxes I collected. Hey that’s not fair! If half of the states do not allow skimming then 50% of the businesses in this country are at a competitive disadvantage to the ones located in states where they allow it.

  • Note: According to the Streamlined Sales Tax Governing Board the Certified Software Providers (CSP) get paid a percentage of the “use tax” collected for processing and submitting the taxes.  This ranges from 2 to 11 percent depending on various factors.  A CSP is being compensated for their time, while the small business owner incurs all the expenses associated with collection.  Basically the “remote seller” is working for free and the CSP is skimming sales taxes off of the legislation.  Alert.  Maybe the 2,101 companies that are volunteer collectors of sales taxes under the Streamlined Sales Use Tax Agreement (SSUTA) are supposed to be compensated too under the vendor discount” and “dealer collection allowance (Any tax attorney’s out there looking for a good class action lawsuit?  Maybe some states do legally owe the volunteer collectors money).  If my company is forced to collect sales and use taxes under the MFA I will be the first one standing in line for my skim of the sales tax money they owe me (from states that allow it).  I am assuming they will say as a “remote seller” I will not qualify, or do I?  It would only be fair to provide me the vendor discount too.

Read my article Wal-Mart Jilts the Consumer & Taxpayer: The Deception Behind the Internet Sales Tax. Basically, Congressman Steve Womack admitted he created the MFA at Walmart’s direction.  Walmart did not think it was fair that some online companies (that did not have physical presence in other states) did not collect sales taxes for remote sales.  Walmart is the driving force behind the MFA and they are using their money to influence politicians.  They are behind much of the “fairness” propaganda behind the MFA.

Here is a twitter post that shows some of the propaganda used by supporters of this legislation in the name of fairness:

Please Note: The signs show, “The government shouldn’t pick winners & losers, Online retailers shouldn’t get a subsidy.”

I think the organizations behind this legislation should be embarrassed.  They hold up their signs claiming that online retailers have an unfair advantage. Take a look at each state and see what type of subsidies and incentives they are giving Walmart style BIG business stores.  Read Philip Mattera’s article, “Shifting the Burden for Vital Public Services: Walmart’s Tax Avoidance Scheme.”  The article also shows big businesses gets property tax breaks, income tax breaks and other types of “incentives.”  Now Walmart wants to force burdensome regulation on small online companies like mine in the name of “fairness.”  My sarcastic statement.  I think Congress needs to create MORE legislation called the Sales Tax Skimming Fairness Act.  It is not “fair” that the government in other states are picking the winners and losers in retail.  It unfairly impacts my sales because they get a government subsidized price advantage by sharing in tax revenue.  I pay Minnesota sales taxes and get no revenue share, subsidies or discounts.

Call your Congressman and tell them the truth about this legislation.  These people are merely holding signs with messages that were made up by big box lobby groups.  Do your own research and you will see that many small business owners are simply being used as puppets by big money to get their legislation passed. Take a moment to read my article “Your Owners” are Engaging In Propaganda: Internet Sales Tax.”  It shows you the hidden propaganda machine created by Walmart.  Walmart is behind a group called the Alliance for Main Street Fairness.  This “Main Street Fairness” group is a Walmart front that is used to send out messages about small business and “fairness.”  Walmart knows they cannot send the message themselves because no-one would have any sympathy for them, so they are using small business owners as puppets and images of “main street” to further their cause.