N.J. Conference of Mayors wants end to out-of-state e-commerce sales tax inequity

TRENTON – The N.J. Conference of Mayors has endorsed a call by the N.J. Retail Merchants Association for changes to out-of-state internet-based sales.

On the heels of a report that was issued last month that stated New Jersey is losing hundreds of millions of dollars a year in uncollected sales and use tax revenue, the Conference this week also called for changes.

The Conference said it wants a “level playing field between New Jersey brick-and-mortar businesses and out-of-state, internet-only retailers.”

Although in-state businesses collect 7 percent sales tax, internet retailers with no physical presence in New Jersey do not, the study by Rutgers’ Bloustein School showed. In that case, consumers are to pay a use tax, but many do not.

“The fact that Internet retailers are able to sell their goods 7 percent cheaper than Main Street mom-and-pop businesses because New Jersey has not modernized its sales tax laws is unacceptable,” Port Republic Mayor Gary Giberson said.

And Somerdale Mayor Gary Passanante said, “Certainly the hundreds of millions of dollars the state would collect by enforcing current law would allow Trenton to pay down years of runaway debt, or aid in direct property tax relief for towns hit hard by the recession.”

In calling for bipartisan legislation to address the problem, Fanwood Mayor Colleen Mahr, legislative chair at the N.J. Conference, said, “All municipalities, regardless of how Republican or Democrat their voters may be, are at risk of losing downtown business unless we level the sales tax playing field as soon as possible.”

League of Municipalities monitors developments 

Another statewide group, the N.J. League of Municipalities, has not taken a position yet on the issue regarding any potential state legislation.

“We have not yet seen a draft of a bill and, so far as we know, it exists only as a concept at this time,” League Executive Director Bill Dressel said in a release.

In its release, the League pointed out that electronic merchants have a competitive advantage over “Main Street’’ businesses; that merchants physically located in New Jersey pay property taxes that improve communities, and they employ residents who in turn pay income and property taxes and buy homes; and that in-state businesses contribute to charities and “give life to the communities that contribute to their prosperity.”

In response to efforts by Congress to permanently prohibit states from collecting sales taxes on online commerce, the Streamlined Sales Tax Project (SSTP) was organized in March 2000, the League reported.

Its objective is to simplify and modernize sales and use tax collection and administration in the United States. Because such a ban would have serious financial consequences for states, the SSTP began as an effort to try to minimize the many differences between the sales tax policies and practices of states, the League said.

There are 24 states participating in the project, along with the District of Columbia. New Jersey became a full member of Streamlined Sales Tax Project on Oct. 1, 2005.

The SSTP is setting up a system by which Internet retailers can voluntarily pay state taxes to the states in which their customers reside.

Based on voluntary participation by the merchants, the SSTP does not represent a comprehensive remedy, the League pointed out. And, to date, Congress has failed to address this issue.

The League said that two bills have been introduced in Washington to address this matter.

The Main Street Fairness Act, an online sales tax bill introduced over the summer by Senator Dick Durbin (D-Ill.), would give states flexibility in how they craft their tax systems to conform to the law. It would condition state enforcement on membership in the SSTP.

The bi-partisan Marketplace Equity Act, recently introduced by Representatives Jackie Speier (D-Calif.) and Steve Womack (R-Ark.), would give states authority to compel remote merchants to collect sales tax. This bill gives states options, including one basing collection on a buyer’s address, as long as the state provides software to the retailers.

Previous coverage

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

 

 

 

N.J. Conference of Mayors wants end to out-of-state e-commerce sales tax inequity