Central VA businesses fear unfair Internet competition

RICHMOND, VA (WWBT) - Shopping online may soon be more expensive, if some Central Virginia businesses have their way.

They complain they're losing business to online competitors who aren't charging sales tax.

"I know they will come into our store, look at things, talk to our sales staff then purchase it online, in part because of the 5 percent sales tax savings they can receive," says James Hatcher of Pleasants Hardware.

He says there's a problem when online merchants get away with not charging sales tax. Now, Congress is reviewing the Marketplace Fairness Act which aims to change that.

"Like the name entails, it's about fairness in the marketplace," Hatcher said.

On Target's web site, at first when you check out, taxes are not calculated but after you put in your shipping address taxes are applied based on your location.

"The reason they have to do that is called a nexus. They have a physical presence within the state, all over the country. If you have physical presence, you are obligated to collect and remit that sales tax," says Nancy Thomas with the Retail Merchant's Association.

She says there's a much bigger problem with popular sites like Ebay and Amazon nationwide.

"Whether you have a physical presence or not and you're just strictly internet, you really do need to [collect] this tax that, let me remind you, is already existing," she said.

"We're asking for the playing field to be made level," Hatcher added.

Virginia Governor Bob McDonnell agrees, citing online sales tax revenue as an additional source for transportation funding. Now, all eyes turn to federal lawmakers to see how they will vote.

On its web site, Etsy says "It's up to each seller to research their local laws about collecting and reporting taxes for their Etsy sales… While Etsy provides a means to apply taxes to your transactions, we do not warrant that these tax amounts will fully satisfy your sales and use tax reporting obligations…"

Brian Bieron with eBay is also weighing in expressing concerns with pending legislation.

"The retail businesses that sell products on the eBay marketplace are required to follow the sales tax policies of the state in which they are located. Yet the current federal legislation would force them to collect and remit sales taxes in every state that they sell into – creating unfair burdens in the form of increased purchase prices, the responsibility of complying with over 9,000 different tax jurisdictions nationwide and potential audits and litigation by out-of-state tax enforcement officials," he said.

Virginia reached an agreement with Amazon to require online sales taxes beginning later this year.

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