While retailers in New Jersey support the state’s deal to have online retail giant Amazon.com start collecting sales tax, they now turn their attention to a host of other online retailers continuing to exploit the loophole.
“The focus earlier in the year was that the legislation (in the state) all revolved around Amazon. Taking that away makes it difficult to advance that legislation again,” said John Holub, president of the New Jersey Retail Merchants Association. “A federal solution is what’s going to capture these remaining online-only retailers … but Washington doesn’t always make the right decision, or make it quickly.”
Still, Holub said he is “more hopeful now that someone at the level of Gov. (Chris) Christie urging Congress to act and provide momentum to get efforts in Washington moving.”
While Holub noted that any legislation passed in New Jersey wouldn’t have the full blanket approach of the federal law, if e-fairness legislation continues to stall in Congress — as it has for 10 years — he said the state’s retailers will explore other options, such as Illinois’ legislation that forces click-through Amazon affiliates to collect sales tax, which was recently deemed unconstitutional by a Chicago judge.
According to Matthew Cheng, president of West New York-based online coupon site eCoupons.com — a click-through Amazon affiliate — even with a growing list of state governors and legislators supporting the federal bill, “it’s not going to get done this year because it’s an election year … and it doesn’t seem to be on forefront of Congress’s agenda right now.”
While Cheng previously said his business would have to relocate from New Jersey under the state’s current legislation, since Amazon cuts off affiliates based in states like Illinois that force online retailers to collect sales taxes, he noted that “online sales tax bills haven’t succeeded anywhere.”
“New Jersey’s legislation is still not going anywhere in the Senate,” Cheng said. “As long as the state doesn’t continue on with it, and the Treasury decides they don’t want to target us, our business isn’t affected.”
Matt Sweetwood, owner of Fairfield-based Unique Photo, said sales tax is “really the difference maker” in attracting customers away from online retailers.
“Whenever I have sales tax holidays, my sales quadruple for the day,” Sweetwood said. “When a customer comes in my store and sits on their smartphone, looking up the price on Amazon and seeing it’s the same as ours, the advantage becomes the sales tax. When Amazon starts collecting the tax, I expect my business to significantly increase, and then I can start hiring more people.”
According to Debbie Schaeffer, owner of Lawrenceville-based Mrs. G TV & Appliances, there are currently a number of online appliance retailers — like Brooklyn, N.Y.-based AJ Madison.com — selling large products to New Jersey residents and promoting they do not collect sales tax on the homepage of their websites. Schaeffer said that’s misleading, because “no matter where they are, the consumer has to pay New Jersey the tax within 20 days after they receive the purchase, though no one really knows that.”
“It doesn’t stop at Amazon. It only begins,” Schaeffer said. “With Amazon collecting sales tax, Governor Christie said the state will get $30 million a year — but that’s only 10 percent of what’s really due to the state. Legislators are complaining that they have to find money, and here it is.”