Evelyn Franklin, co-owner of gift shop Cozy Corner on Gainesville’s downtown square, said Internet retailers that don’t charge sales tax on online purchases hurt her business.
The U.S. Senate plans to vote Monday on a bill that would authorize states to require businesses that sell online to charge and collect sales tax on the purchases. Georgia already has a law that went into effect in January designed to increase the amount of online sales tax the state collects. But Amazon.com, the world’s largest online retailer, isn’t charging the tax. Checks of other retail websites show those companies aren’t charging it either.
“It affects us with sales,” Franklin said. “The fact that they can go online and buy it for the same amount that we can offer it to them for.”
Cozy Corner sells many popular, pricey purses from brands such as Spartina 449, Vera Bradley and Cinda B. The brands offer their products online and not all charge sales tax for items shipped to Georgia residents. Amazon.com also offers those brands for sale and doesn’t charge sales tax.
“We have that with the Vera Bradley (merchandise),” Saleswoman Tracy Waggoner said. “It undercuts the local business, it really does.”
Online retailers are currently required by federal law to charge and collect state sales tax if the retailer has a physical presence in that state. The new Georgia law expanded the definition of physical presence to try to get that revenue, but the state administration is still in negotiations with Amazon to get it to start charging sales tax to Georgia buyers.
John Fleming, communications director for the Georgia Retail Association, said they are sure the Georgia Department of Revenue will take action at some point. DOR Spokesman Jud Seymour declined to comment on the state’s dealings with the online giant.
A message left with the Amazon public relations office for comment didn’t receive a response.
Gov. Nathan Deal said the state is working with Amazon to bring the company into compliance with state law.
“I don’t think that final agreement has been reached yet,” Deal said. “I don’t think it has been made public at least.
“I think Amazon has recognized that this is coming and it’s either going to be done by the federal government saying it’s OK or they’ll have to contend with a state-by-state approach. I think they would obviously rather not have to fight in all the states.”
Fleming said it makes brick-and-mortar retailers mad that consumers come into the store to look at products, then buy the same item online to avoid sales tax.
“A lot of the time, it’s neighbors selling to neighbors,” he said. “These are people who have built their businesses in communities for decades.”
Franklin said customers sometimes actually show her the online purse at the same price on their phones.
“Well, what can you say?” Franklin asked. “It’s not all their fault; some of it is Vera Bradley’s fault, too. They’re offering stuff at the same price we have to sell it for.”
The Senate’s Marketplace Fairness Act of 2013 would allow state and local governments to enforce existing sales tax laws if states simplify their tax administration and collection, and exempt small online retailers.
The bill’s supporters, including Georgia Republican Sens. Saxby Chambliss and Johnny Isakson, emphasize this not a new tax or an increase of an existing tax. The current system penalizes local businesses that fund schools and roads and employ Georgians, an electronic newsletter from Isakson said.
“Congress should take this opportunity to put brick-and-mortar retailers on the same playing field as e-commerce retailers, Chambliss said in a statement. “This bill ensures that local businesses are not placed at an unfair disadvantage compared to their online competitors.”
Deal and the state retail association said they support the federal legislation, despite some conservative advocacy groups, such as Americans for Tax Reform, calling it a tax increase.
Franklin said she supports the Senate bill, too. The store’s market is customers needing gifts for events such as weddings and baby showers. Both Franklin and Waggoner said they offer personal service consumers can’t get online, such as free gift wrapping and a wedding registry.
Waggoner said it’s easy to come in and pick something up and to return it if it’s not right.
“You know what you’re getting,” she said. “You’ve got people who like that and still want that.”