Thursday, March 17, 2011

Sales Taxes and the Mailing Industry

The Wall Street Journal reported today that some of the nation's largest retailers are backing a coalition called the Alliance for Main Street Fairness to force e-commerce only retailers to collect sales taxes on their web-based sales just like they do on their sales at both brick-and-mortar outlets and over the Internet.  Companies that are part of the coalition include Wal-Mart, Target, Best Buy Co., Home Depot Inc. and Sears Holdings Corp.   These large retailers have expanded their web presence and are among the top twenty web-based retailers in the United States.  On the other side of this issue are on-line only companies like Amazon. com, NewEgg, and regional merchants that sell nationwide over the web.

The issue is being raised in states including California, Texas, and Illinois which all have significant challenges in trying to balance their budgets.  Illinois recently passed legislation expanding the criteria for requiring companies that sell products in the state to collect sales tax on web based sales and similar legislation is being considered in the other states. 

For decades the mailing industry through catalog merchants and more recently e-commerce retailers have thrived from business generated from the printing of catalogs and the delivery of parcels.   Customers were driven to catalog and e-commerce sales channels due to better selection, prices, and yes even the lure of not paying sales taxes.  Today, however, the mailing industry relies on the business of printing catalogs and delivering parcels from companies that both collect and do not collect sales taxes in all fifty states.   The mailing industry has seen growth in demand for its services from both firms that collect and do not collect sales tax.   Regardless as to how this political fight ends, this growth will continue as customers take advantage of the convenience, selection and prices that the on-line retail channel offers.

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