IBJNews

Lawmakers looking for solutions to online sales tax issue

Back to TopCommentsE-mailPrintBookmark and Share

An Indiana lawmaker will push this legislative session to require the state to collect sales taxes from online retailer Amazon.com Inc.

Sen. John Broden, D-South Bend, intends to file a bill that would force the state to collect sales taxes from online retailers that have a physical presence or affiliated distributors in the state. It’s similar to a measure he advocated—unsuccessfully—to insert in the budget bill during the last legislative session.

"I have found this [policy] to be incredibly shortsighted and unfair for brick-and-mortar retailers," Broden said. "I don’t know why we are choosing to punish people who hire people who live in community and who pay property taxes."

Retail advocates contend state law already requires the Indiana Department of Revenue to collect sales taxes from Amazon. On Thursday, Simon Property Group Inc. filed a lawsuit in Marion Superior Court to make that case.

Grant Monahan, president of the Indiana Retail Council, said Broden’s bill would “make it abundantly clear that online retailers are to collect sales tax.” He hopes that lawsuit will strengthen the prospects for state legislation, which his group is backing.

The retail council also has been in discussions with Sen. Greg Walker, R-Columbus, about introducing legislation, but he has not yet committed to do so.

States across the country have been pushing to collect sales tax from Amazon, and some have faced lawsuits or threats to remove distribution centers from the states as a result. Indiana economic development officials’ agreement with Amazon that the state would not require the company to collect sales taxes has made some Indiana leaders reluctant to pursue a similar law.

To help lure Amazon to Indiana, the state repealed a law in 2007 that required companies that didn’t maintain a place of business in the state but had affiliated locations to get a retail merchant’s certificate, which would subject them to the same tax-collection duties as brick-and-mortar shops.

Amazon has four distribution centers in the state.

Gov. Mitch Daniels’ administration—as well as Amazon officials—have advocated a federal solution to address the issue.

Key fiscal leader Sen. Luke Kenley, a Noblesville Republican, has been at the forefront of efforts to get a federal law requiring online sales-tax collections. But Kenley said Friday that he’s not inclined to support a state solution.

He’s concerned a law such as the one Broden is proposing only allows the state to go after online retailers that have a physical presence in Indiana. That would put Amazon and other online retailers with an Indiana presence on unequal footing with other online retailers that don’t have physical locations here and, therefore, couldn’t be required to collect sales tax. He points to eBay as an example.

“I’m trying to level the playing field for all retailers,” said Kenley, who formerly ran a family-owned grocery business. “I’m worried the legislature will say, ‘OK, we’ve got the Amazon tax. Now we’re done.’”

Kenley and members of the Daniels administration are in ongoing conversations with Amazon to convince them to collect sales taxes. So far, “they haven’t said no, but they haven’t said yes,” he said

Kenley, who spent two days in Washington, D.C., this week discussing the matter with federal lawmakers, is among those who are hopeful the issue could get traction in Congress this year.

Both House and Senate bills have been filed, and a bipartisan group of senators, including Illinois Democrat Dick Durbin and Wyoming Republican Mike Enzi, intend to introduce a bill on the issue early next week, Kenley said. They’re also tentatively planning a Nov. 30 hearing on the issue.

Monahan said he also supports a federal fix as the “ultimate and best solution” but hopes to see Indiana lawmakers act in the meantime.

“I think it’s important to keep in mind the unlevel playing field that exists today between brick-and-mortar stores and Amazon,” Monahan said. “Indiana can do something about the Amazon situation now.”

ADVERTISEMENT

  • Internet Tax
    Wow, this is just another feather in the cap for the flat tax or 999
  • Tax quandry
    Hey Mike,
    It would seem from the news lately that taxing internet sales is becoming fashionable in many states. So, before too long all states will be taxing these sales making your need to move sort of unnecessary. You do raise a question though; Who pays the sales tax on purchases made from Indiana via internet when purchased by a person in another state? Most states require a person making internet purchases liable for the sales tax in their own state. If sales taxes are collected by an Indiana online site, how do those taxes get transfered back to the original purchasers state. The way government works they'll probably want the taxes collected on both ends: From the state the purchase was made, and again from the state from which the purchase was made. Of course, politicians will find justification for doing so....it is for the PEOPLE!
  • Brick & Mortar or Citizens
    Well, what do you know. A politician that wants to tax the public...how novel! Having said that: The legislator claims its unfair to Brick & Mortar businesses that internet sales are not taxed. But, I guess it goes unnoticed that the citizens of Indiana enjoy no taxes on those sales. So, this legislator is choosing between businesses and people, and he is on the side of business, therefore; he's against the people he represents. You cannot be on both sides at the same time.
  • Internet tax
    The Simons should go straight to you know where. The internet should not be taxed, we are taxed to death by our slime bag elected officials, they can't wait to give us another screwing.
  • It Director
    We have a brick and Mortar store in Indiana as well as a large internet online business.,

    Should Indiana decide to tax our out of state internet sales we would move the operation out of state. Only because in an already extremely competitive market, the tax would kill our net business. Uneven playing field.
    • Tax Will Only Hurt Indiana
      I had so much to write about this issue that I ended up writing an entire article about it:

      http://www.tricia.me/2011/11/04/internet-tax-looming-in-indiana/

      Essentially we have to much more to lose than we have to gain if our state passes a tax like the one proposed. We will never see any of the revenue and will end up losing jobs. We also put our state at risk to be sued because these internet taxes based on affiliate nexus are not constitutional.
    • False choices
      Joyce - Uncle Sam is the reason for all of this. Only Congress can regulate interstate commerce. Thus, a state can only interfere with interstate commerce when Congress allows it to do so, or when the interference meets a consitutional test. Here, what Amazon is doing is constitutionally correct. Indiana cannot make Amazon collect the sales tax because Amazon is not located in Indiana, only it's affiliates (and we don't have affiliate nexus). Thus, Amazon is correct to not be collecting the tax, and unless Congress legislates specifically, any state action forcing Amazon to collect is constitutionally suspect.
    • Federal is way to go
      Totally agree w/Rick - this should be Federal matter, determined to enforce with all states...Amazon moved once, we all know they have no problem filling warehouse jobs, with the unemployment rate, any other state would be happy to accommodate! My family and friends are employed there, and grateful for the job, rather than collecting unemployment - PLEASE consider the consequences of state-by-state legislation in this matter!
    • stop forcing business to do your work
      What are we going to use the money? Where will the money be allocated? You are a fool if you think the state will use it wisely - you are an even greater fool if you think the creation of an "internet" sales tax federally will ever make its way to the state. LEt alone any true main street projects. I am not talking about Indy but the thousands of small towns around the state who have been forgotten. Some people shop on the internet just like they did the sears catalogue - because there are no shops or malls close by. Just leave it alone, go back to arguing about the time change - something else.
    • Internet Sales Tax
      What business does the federal government have mandating that businesses pay state sales tax? Keep Uncle Sam out of this.
    • There's already an internet tax
      Indiana already has an internet "sales" tax. It's called the Use Tax and is 7% too. The state simply does not enforce collection of the tax. They want to offload that burden to business just like always.

      Just collect the use tax due from the buyer and the problem is solved.

      These legistlators should learn what taxes we already have instead of creating redundant new taxes.
    • Everyone or no one
      All on line retailers need to collect sales tax or none of them need collect. It's silly to expect Amazon to collect sales tax because it is in Indiana while others outside the state do not. Amazon would simply move to Illinois(kinda like Indiana Democrats)
    • Federal is the way to go
      As much as I love Amazon and hate paying more taxes, this is inevitable.

      It would be best dealt with at the federal level, because that takes the power away from Amazon to arbitrarily move it's facilities from state-to-state because a state starts requiring them to collect sales tax.

      Post a comment to this story

      COMMENTS POLICY
      We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
       
      You are legally responsible for what you post and your anonymity is not guaranteed.
       
      Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
       
      No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
       
      We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
       

      Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

      Sponsored by
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

      2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

      3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

      4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

      5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

      ADVERTISEMENT