Why should every bricks and mortar business owner and employee be writing and calling their Governors and state legislators about this issue? Why should all of you be talking to your customers, neighbors, and other bricks and mortar businesses about this issue? Because there are 42 states in this great country of ours that require b&m businesses to collect and pay sales tax, while giving online businesses a free pass. 10 or 15 years ago, when Internet businesses were just getting established, the excuse was that the federal and state governments didn't want to hinder the development of the Internet. WHAT? Did start-up b&m businesses get the same consideration? I don't think so. That position was spurious to begin with and should have been a scandal if more people had been paying attention (not that I was...).

Online businesses from the get-go have had an unfair advantage over bricks and mortar businesses. They have been able to sell their products to consumers for a lower price than b&m owners have because the states basically gave them a free pass on sales tax. And consumers who have taken advantage of the lower prices are also culpable, because they have continued to receive all the state services (roads, schools, fire departments) while avoiding payment of their share of state taxes. The vast majority of MPIBA members are b&m stores but we do have a handful of Internet-only booksellers. Last year one of these members, apparently indifferent to the inequity of the situation, sent me an angry email and quit the Association because he didn't like the position that MPIBA has taken on this issue.

Ok - on to NEXUS. Here is the crux of the issue. Most states' sales tax laws require that online businesses collect sales tax from a customer ONLY IF THE ONLINE BUSINESS HAS "NEXUS", defined as a physical presence in the customer's state. So Amazon, for example, at least theoretically only has to pay sales tax in those states where they have a warehouse or other office. However, in some states' statutes, including Colorado's, the definition of nexus is subject to interpretation, i.e., if the Department of Revenue decides to, it can broaden the definition to include "affiliates", also defined as "representational nexus". When this interpretation of nexus is used, Amazon and many other companies would be required to pay sales tax in virtually all of the 42 states. This was the approach that was successful in New York State last year.

Now I'm pleased to report that Govenor Ritter of Colorado has included projected Internet sales tax revenues in the proposed new budget, and has authorized the Department of Revenue to adopt the broader interpretation of nexus. So while I hope that all of our members in the various states will talk with other b&n business owners and write to their legislators, it is most urgent that Colorado residents act now. Dave Grogan and others at the ABA have prepared a webpage with a template letter for each of the 42 states. Click here to access that information. And keep in touch! Lisa K.