Internet Sales Tax

The topic of internet sale tax collection is in the news these days, both at State and federal level. Some of the talking points raised about how the internet sellers are undercutting the main street stores are just maddeningly absurd. First, I imagine a bricks and mortar store without an online presence is about as scarce as hen’s teeth these days. Secondly, the time required for keeping in compliance with the individual state filings is more than most can bear. Lastly, for a large portion of online sales the main driver is lack of product availability in the way in which the customer wants from their local sellers.
I think Duane’s business in many ways is the example to consider when determining the impact of online sellers on local businesses. I placed an order with The Keeping room after searching for quality furniture at stores within 100 miles of my home. These stores had limited offerings on the floor, and sales staffs that could not honestly and informatively answer my questions about the product lines so that I could order with confidence. So, after striking out with these furniture dealers I looked online, found this website and read questions and answers, looked at pics and gained a much clearer understanding of what would suit my preferences.
I have no idea how many sales Duane makes from his online operation (I am curious as to the percentage of sales being conventional vs. online)or how other dealers online sales impact his brick and mortar store sales. What I am certain of is that my purchase from the Keeping Room did not cost a local furniture store a sale- I would have just kept using my old furniture.
Why is this concept so foreign to so many?

I do about 70% out of area sales these days, which surprises me quite honestly. I have more customers in Texas and California than I do in Virginia and Maryland (currently). Sales tax reform is getting a lot of attention in Congress right now, and its going to pass (or has passed) in the Senate, but faces a tougher time in the House. Any way to get more revenue always gets the attention of Congress .. lol.

The major issue with this is there is no universal reporting agency as far as I'm concerned, and no standardized reporting. So let's say I sell to 26 different states in a month, I would have to fill out 26 different sales tax reports, no two of which are alike, and submit 26 sales tax payments. That's nuts. Really. I'd rather see a GST (National Sales Tax) which is what Canada has. One report each month, let the feds figure out how to divvy it up.

The current bill exempts businesses that do less than $ 1 million in annual sales from having to collect the tax in every state, and I fall into that, so even it if passes it probably won't affect me and I will have to collect only VA sales tax (which is going to 6% on July 1st). If I get a little bigger though, I'd have to cut orders off nearing $ 1 million annually! No way I'm registering and submitting a sales tax license and report to every state that has it. What a nightmare.

"I'm sorry sir, I can't take your order until January 2nd, I'm at my sales quote for this year". You gotta love it - who elects these people to Congress, anyways?

For me my decision to buy from you is based on service and knowledge not taxes nor price. I don't even know what the dealers in California charge for Hancock and Moore because we never get that far. I swear every single one has the same lines. "It's top of line" " Buy grade 2 since you have kids" "8-way hand tied".

Duane, I bet your real sales are greatly under estimated too. You are probably responsible for a bunch of other dealers sales of H&M. I hope they are treating you real nice over there as I never even heard of the Hancock and Moore brand before this site popped up in the highest ranks of Google.

I appreciate the comments! I am always fighting the battle that I am 'stealing sales' from local dealers that complain about my operation, but in most cases I think its that they leave the door open by not taking care of business properly. Truth be told, I'd like to have mostly local business rather than long distance because I can't control the delivery process when going out of area and that's ultimately the weak link to it all. I depend on other companies to deliver the product flawlessly and they don't care about it the way I do, not even the best of them. On every long distance order I keep my fingers crossed that it arrives without issues, and its a headache for all involved when it doesn't. I do have a passion for finely crafted things, be it a leather sofa, or a tiger maple Highboy or an hand-crafted automobile. As such, I tend to be more involved in learning what makes things they way they are and that gives me a deeper knowledge base than your average dealer. All I do here on the forum is share that accumulated knowledge and there's never a hard sell to buy from me - in fact - I don't even do follow up calls for potential customers! I don't believe in hard sell, just education. Knowledge is Power. Buy from whomever you are comfortable with, that's my belief. Hopefully I can earn some of that business and stay afloat when so many stores are continuing to fail in this industry.

"...they leave the door open by not taking care of business properly."

Sadly, I'm experiencing this now, with my very first H&M order. Questions I had which were addressed on this forum, the salesperson (with 20+ years' experience,at a major local dealer) had never encountered before. I just received the alleged cutting I asked for, turns out the salesperson sent me a generic swatch from a reel, complete with hole for the ring and the description on the back, instead of a cutting from the material they actually plan to use to make my particular chair. Gave some excuse when I asked about it, now is going to get the right one.

I wanted to go local, for the reasons you indicated. But so far, the jury is still out, at best. Crossing fingers for how things go from here.

Im an owner of a brick and mortar business and I have to respectfully disagree with comment that internet sellers are undercutting main street stores are maddenly absurd. It effects our business, and probably much more then I even know. One area I do know about is a line of upper line grills we are a master dealer with. A customer can purchase a $1500 grill online and not pay tax, yet Im required to collect it?? Please explain to me how this is not undercutting my store?? Im all for taxing online sales....creating a level playing field for all businesses both online and brick and mortar. That or collect no tax on either store, either way Im happy! I do agree with Duane that if they are considering this they need to come up with an easier way to pay this tax however, because a tax collection for every state is not going to be very easy. At any rate the collection of sales tax from on online verses a brick and mortar store has nothing to do with the stores inventory they carry, the knowlege of their sales people or how they satisfy their customer. In most cases most people shop the brick and mortar stores then go online to make the purchase because of this tax savings. It happens because we fight this all the time with our grill line.....oh and by the way we are the biggest dealer, have the most inventory assembled on our sales floor, and most knowlegeable and trained sales people on this grill for 100's of miles. Its because of this that we get customers coming in from quite distances to either purchase a grill, or as we find touch, feel and get an education of the product then end up purchasing online to save the tax. Oh and by the way we do not sell online......

I suppose that you have your reasons for not selling your product online but it sounds to me that is the way that your customers prefer to buy. My ( maddeningly absurd) point is that after the tax is imposed buyers won't make the same buying decisions as before and it is unlikely that any boost in sales to the brick and mortar operation will be realized. But, by mandating compliance with 50 seperate taxing authorities - many small brick & mortar stores will drop their online operation. You tax it more- you get less of it. You tax it less- you get more of it.

My favorite sales tax story....

Many years ago i had an a couple come in that lived in Virginia and wanted a expensive dining room set, totaling about $ 20,000. I can't remember the exact amount, but it was pricey. The husband was adamant that he was NOT going to pay sales tax on it, which was 4.5% at the time - around $ 900. He told me to show the furniture delivered to his downtown Wash DC law office so he could avoid the tax, but then to deliver to his home in Vienna VA. I said 'I cannot do that, its illegal'. He says 'You can look the other way, wink - wink'. and I replied, "or you can pay the Virginia sales tax as required by law." He said "It will cost you a sale if you don't do it this way" and I say "So be it, have a good weekend, I do not ever try to cheat the state out of their tax money, that's a one way ticket to trouble." And he and his wife left the store, she was FURIOUS with him about that, too.

Four or five days later the husband calls back, tired of being beat on by his wife about this group she wanted. He is STILL not going to pay tax, so he says 'Just deliver to my loading dock in downtown Washington DC and I'll haul it home from there.' Fine, I can do that because that's legal as long as we are delivering out of state and have an address to prove it. We get there with all the pieces carefully wrapped and put them on the loading dock. I ask him where his truck is? He points to a ratty old F-250 Ford Pickup that was a landscaper truck and I said "You are not going to haul that in there, please tell me no you are not". But that was the truck he borrowed. I saw no pads or tie downs, and offered to let him use mine, but he declined because he didn't want to have to be bothered to return them to my store. "It will be fine, he says - don't you worry about it". So.. I didn't! Off we went back the store.

A few hours later, I get a call from his sobbing wife. She was VERY upset because all the pieces were damaged from being hauled in that pickup truck with no pads/ She said 'what can i do? its a mess!' So I sent our truck out there to go get it all, and she was right, every piece was damaged. I returned the pieces to our cabinentmaker and the repairs came to $ 2,300, almost 3x the sales tax. This time, when they came back from repair, she insisted I drive them back to her in our truck and she paid the delivery fee. So we did!