October 25, 2001 ABA Calls on Governors to Stand Up for E-Fairness ABA has written the nation's governors urging them to equitably enforce all existing sales tax regulations in their states. As ABA President Neal Coonerty noted, "Independent booksellers and other retailers are not looking for special treatment. They are simply asking that current laws be enforced uniformly and fairly." The action comes just over a week after a national moratorium on any new taxes on Internet commerce expired. However, a key point of the letter is that "it's critically important to underscore that . . . we are not talking about new taxes in any way, shape, or form." Instead, Coonerty reminded the governors, "Despite an increasing integration of their bricks-and-mortar and Internet branches, a number of major national retailers are failing to collect required sales taxes on e-commerce transactions." The letter argued that "by hiding behind the façade of a 'separate' Internet company, many national retailers are dodging their legal responsibilities." The expansion of such a "clicks-and-bricks" strategy, Coonerty wrote, "clearly establishes a physical presence in the taxing state and establishes a substantial nexus between the seller's activities and the states." An important consequence of the failure to enforce current laws, Coonerty reminded the governors, will be a loss of revenue for such essential local services as policing, fire fighting, and schools. "The problem will only grow worse as more e-commerce companies that fail to collect sales tax compete unfairly, driving more consumers online because of an unfair playing field, resulting in more lost tax revenue," he noted. Coonerty called on the governors to, "immediately take concrete steps to end this discriminatory enforcement of existing law and require all retailers--whether they operate online, in physical stores, or in some combination of both--to start to fulfill their obligation to collect sales taxes." In an interview with BTW, he said that it was his strong hope that booksellers concerned with the e-fairness issue would write their state governors expressing their views. He noted that booksellers could certainly adapt the language of ABA's letter for use in their own states. The following letter was sent to the nation's governors and calls on them to fairly enforce the existing sales tax regulations in their states. Booksellers planning to write their own letters to their governors can adapt this letter, and are asked to send copies of any correspondence to Kristen Gilligan, ABA, 828 S. Broadway, Tarrytown, NY 10591; fax (914) 591-2724 or (914) 591-2720. October 26, 2001 Dear Governor: I am writing on behalf of the American Booksellers Association and our members, thousands of bricks-and-mortar independent bookstores across the country, a growing number of whom also conduct business on the Web. For many months now, booksellers have been working with other businesses in their communities and on the national level to contest a blatantly unfair loophole that has created an uneven playing field in e-commerce. Despite an increasing integration of their bricks-and-mortar and Internet branches, a number of major national retailers are failing to collect required sales taxes on e-commerce transactions. This flaunting of the law comes against a backdrop of continued debate in Washington regarding a possible extension of the Internet tax moratorium. However, it's critically important to underscore that--whatever the outcome on Capitol Hill (and as I write the moratorium has expired, with the prospect of a quick passage of an extension uncertain)--we are not talking about new taxes in any way, shape, or form. By hiding behind the facade of a "separate" Internet company, many national retailers are dodging their legal responsibilities. To give just one example, Barnes & Noble continues to roll out new stores that offer access to its online operations, where online orders can be placed from a physical store and customers who buy books and CDs from the Barnes & Noble Web site will be able to receive merchandise credit. In addition, for some time now, Barnes & Noble has been advertising their e-commerce sites in their physical stores in a number of ways. This "bricks-and-clicks" corporate strategy clearly establishes a physical presence in the taxing state and establishes a substantial nexus between the seller's activities and the states. And Barnes & Noble is not alone. When companies dodge their legal responsibility to collect sales taxes, they are siphoning money away from such essential local services as policing, fire fighting, and schools. The problem will only grow worse as more e-commerce companies that fail to collect sales tax compete unfairly, driving more consumers online because of an unfair playing field, resulting in more lost tax revenue. Independent booksellers and other retailers are not looking for special treatment. They are simply asking that current laws be enforced uniformly and fairly. The work of many independent booksellers and others has done much to educate consumers and others regarding e-fairness. However, it is state authorities who must take the necessary actions to put a stop to this blatantly unfair situation. Please immediately take concrete steps to end this discriminatory enforcement of existing law and require all retailers--whether they operate online, in physical stores, or in some combination of both--to start to fulfill their obligation to collect sales taxes. Thank you for your consideration. Sincerely, Neal Coonerty President, American Booksellers Association Owner, Bookshop Santa Cruz, Santa Cruz, CA cc: Appropriate State Taxing Authority Topics: Fair Trade Practices, Sales Tax Initiative, News - Bookselling,