News From Terre Haute, Indiana

Indiana Legislature

November 29, 2011

Coalition picks ‘Cyber Monday’ to launch

INDIANAPOLIS — Indiana's bricks-and-mortar merchants are ratcheting up pressure on state lawmakers to close the online sales tax loophole that lured the Internet retail giant Amazon into the state four years ago.

A coalition of 250 merchants from across Indiana on Monday launched a multi-media blitz aimed at convincing legislators to pass a law that would force online retailers like Amazon to start collecting the sales tax.

The announcement came on Cyber Monday, dubbed so for its post-Thanksgiving surge in online sales, following so-called Black Friday, the day merchants’ profits put them into the black financially.

Coalition members contend the Indiana legislature’s past actions and inactions have created an un-level playing field that gives Amazon and other online-only stores an unfair pricing advantage by not having to tag on the 7-percent tax.

“When the competition is unfair and created by government policy, that’s wrong and that should be repaired,” said Grant Monahan, president of the Indiana Retail Council, which is helping to back the new coalition.

That “repair” includes rolling back a 2007 law that changed the state’s tax rules to favor Amazon but harmed storefront retailers, Monahan said.

Indiana, like most states, requires retailers with a physical presence — including offices, distribution sites, sales locations, warehouses or storage facilities — to collect and remit sales taxes from purchases.

In 2007, the legislature took out the part of the state’s tax law that required affiliates of retailers to collect the tax. That change came after the state made a deal with Amazon: The online retailer agreed to create an affiliate that would open distribution centers and bring jobs to in Indiana if the state would agree not to go after Amazon on the sales tax.

“Indiana shouldn't be picking winners and losers,” Monahan said.

Amazon has declined to answer specific questions about its status in Indiana, but it faces similar battles in states across the U.S.

Amazon has repeatedly said it wants a federal solution to the issue because 45 states have sales tax laws that vary significantly. But Monahan said Indiana can’t wait for Congress to act.

He and others have pushed the online sales tax issue hard in recent months, citing the economic hits taken by store owners and the state.

Shortly before Thanksgiving, the Indiana Fiscal Policy Institute released a study that said the state annually loses $40 million to $114 million in sales tax revenue from online sales, and additional millions from catalog sales that go untaxed.

In October, the Indianapolis-based Simon Property Group, the nation’s largest mall owner, sued the Indiana Department of Revenue over the issue. The Simon group argued the state’s tax deal with Amazon created an “illegal and unconstitutional subsidy” for the online retailer.

Two Indiana state senators, South Bend Democrat John Broden and Columbus Republican Greg Walker, have said they’ll file bills in the 2012 session that begins Jan. 4 that would compel online-only retailers to collect the sales tax.

Meanwhile, State Sen. Luke Kenley, a Noblesville Republican who chairs the Senate appropriations committee, is scheduled to testify Wednesday in front of a congressional committee studying the issue.

Kenley, who heads a multi-state coalition pushing for federal legislation to compel online retailers to collect the sales tax, said the absence of a “puts the bricks-and-mortar retailers in our communities at a real disadvantage.”

Maureen Hayden is Statehouse bureau chief for the Tribune-Star. She can be reached at maureen.hayden@indianamediagroup.com.

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