A federal bill that would allow states to collect taxes on Internet sales is moving through Congress, and the pool and spa industry finds itself in the rare position of largely disagreeing with conservative Republicans.
Called the Marketplace Fairness Act, Senate Bill 743 would apply to firms generating more than $1 million in online sales revenue. Customers would pay based on their own local rates, and the tax revenues would go back to their home jurisdictions.
The legislation was sponsored by Sen. Michael Enzi (R-Wyo.), Richard Durbin (D-Ill.), Lamar Alexander (R-Tenn.) and Heidi Heitkamp (D-N.D.).
The bill only addresses sales from out of state because websites already must collect taxes from local transactions. If enacted, the date of compliance would vary depending on states’ individual tax codes.
The bill passed the Democrat-dominated Senate 69-27, but is expected to hit a roadblock when it reaches the Republican-run House. Some conservatives object, saying the legislation imposes new taxes. Others believe the bill represents taxation without representation because the state governments receiving the funds would not be accountable to the e-commerce companies sending them.
But many of the pool and spa industry’s brick-and-mortar retailers have long hoped for the day when websites would have to charge the same taxes they do.
It’s a rare situation for the predominantly conservative industry to find itself at odds with Congressional Republicans. Like some politicians who oppose a web tax, pool and spa professionals largely object to added regulation and taxation.
It is a tension felt by Ann Janowics, chairman of the Association of Pool & Spa Professionals’ Retailers Council. “As an American, I agree that taxation without representation is unfair,” said the general manager of Kasper’s Aqua Clear Inc. in Easton, Pa. “We as a brick and mortar have a physical presence, so any sales taxes we collect go to my local township [or] my local state. I know it’s all going to my area and my states that I work within.”
She also has mixed feelings because it would require websites, potentially even those run by brick-and-mortar operations, to keep track of thousands of tax jurisdictions. “That’s going to make it harder for smaller retailers ... to comply with all these different sales tax regulations,” she said.
Others see no contradiction between the bill and the industry’s conservative values. For instance, the Northeast Spa & Pool Association fervently supports the bill. The legislation doesn’t propose a new tax, said NESPA Executive Director Lawrence Caniglia.
“The law already requires that if I don’t pay sales tax, I have to pay use tax, which is the same thing,” Caniglia said. “It’s just hard to enforce. This is a way to make everybody honest.”
Internet retailer Dan Harrison believes the bill would impose an unfair burden on companies like his. Staying abreast of so many tax codes would require expensive, yet-to-be-developed technology, and the correspondence to all the agencies would cost thousands of dollars.
“Even for our company, an under-$10 million Internet company, I would probably have to hire five or six full-time employees who only have to keep track of the sales taxes,” said Harrison, who is president of Las Vegas-based Poolandspa.com.
