Retailer says small businesses threatened by non-collection of sales tax by out-of-state e-commerce

TRENTON – Old-fashioned bookstores are particularly at risk to the effects of lost sales tax revenue in the battle against online-based, out-of-state vendors.

Harvey Finkel, who runs Clinton Book Shop, sees the problem firsthand.

“There are times when people walk into the store,’’ he said, “they’ll spend 20 minutes … they’ll say, ‘that’s nice, I’m going to buy it online.’ They’ll even say they’re going to buy it from Amazon.  It’s amazing.’’

What the N.J. Retail Merchants Association finds even more amazing is the competitive disadvantage it says its members face when battling out-of-state internet-based companies that don’t assess the sales tax.

“It’s a fairness issue,’’ said Association President John Holub today as his group unveiled a report done by the Rutgers University Bloustein School that estimated the state is losing hundreds of millions of dollars in sales and use taxes that go uncollected.

“We’re at a significant competitive disadvantage,’’ said Holub, who added that absent a federal solution, the best alternative is to convince the state to require out-of-state, internet-only companies to assess the sales tax.

Robert Prunetti, president and CEO of the approximately 1,500-member Mercer Regional Chamber of Commerce, said he has heard from companies losing out on sales of big-ticket items such as appliances due to such competition.

And in future years, the rate of online shopping only figures to double or triple, representing a greater threat for N.J. businesses. “Margins are going to be even smaller. It’s tremendously critical for us to do something now,’’ he said.

Holub said that such non-collection conduct by out-of-state online businesses essentially turns purchasers into scofflaws because they are responsible for the use tax. “The onus is on the consumer,” he said at today’s press conference to release the Rutgers study. “The tax is still owed, it’s line 44 on the income tax form.’’

He said their association is just in the early stages of reaching out to state officials to convince them of the necessity of doing what he said some other states already have started to do: Make sure the sales tax is collected and paid.

But according to Finkel of the Clinton Book Shop, time is critical for small businesses.

“After we pay everything, we’re lucky if we make 2 percent a year,’’ he said.  “With a 7 percent sales tax, we can’t even get to that 2 percent.  We are the community.  We are little retailers.  We live in communities, support communities. We give thousands a year to schools, to non-profits.  It’s painful when competing against big giants. We’re just looking for fairness. Level the playing field.’’

Previous coverage:

Report says N.J. losing hundreds of millions to out-of-state e-commerce

 

Retailer says small businesses threatened by non-collection of sales tax by out-of-state e-commerce