Madison businesses debate online sales tax
Cyber-based co. says it could shut down, city store says tax levels playing field
MADISON, Wis. — Rick Remeschatis is bracing for backlash from a bill.
“Why would anyone want to do that? You know, why would you want to impose such a heavy burden on businesses?” Remeschatis said.
Remeschatis runs Wisconsinmade.com with his wife and has been closely monitoring the progress of the Marketplace Fairness Act. The bill was already passed by the U.S. Senate and the House will soon debate the issue on online sales tax.
Cybershoppers are supposed to pay sales tax on any online purchases by filing them in their annual federal taxes. Retailers with a physical store in the state are required to charge sales tax upfront.
Remeschatis sees any of conveniences of e-commerce as fair competitive advantages, and he said these new measures would be complicated and could actually cost him a lot of time and money to figure out.
“It will be a daunting task to determine what’s taxable in each jurisdiction and what’s not,” Remeschatis said.
Remeschatis said he’s most concerned about integrating software promised by the federal government into the site. If the bill passes, each state is supposed to distribute software with the appropriate sales tax information programmed in.
Remeschatis doubted it would be universally compatible, and has already anticipated reprogramming some of the page. That, he said, could be expensive.
“I guess our fear is the whole cost of implementation and whether or not we would, in fact, be shut down if we were not able to comply,” Remeschatis said.
Under the law as it is now written, Remeschatis said Wisconsinmade.com would be exempt from the new requirements.VIDEO: Madison businesses debate online sales tax
Any business that sells less than $1 million out-of-state annually would not fall under the new rules. Wisconsinmade.com falls under that threshold for now, but Remeschatis said this law could discourage him from expanding the business to its full potential.
With his warehouse filled with high-ticket items, American TV President and CEO Doug Reuhl said he has customers walking out on his prices because they don’t see the sales tax added to their online purchases.
“I think consumers don’t often believe that they have to pay use tax, which they do in the state of Wisconsin certainly,” Reuhl said. “And in every state we do business, consumers have to pay use tax, so it actually makes it easier for the consumer to pay the sales tax. They don’t have the burden of keeping track of those orders and putting them on their income tax return.”
Reuhl said putting the liability for sales tax on the seller would level the playing field and possibly keep more business in his store.
“I think it’s inevitable that online retailers will have to collect sales tax. It’s just a matter of time. I don’t buy the argument that it’s too burdensome to do it,” Reuhl said. “Brick-and-mortar retailers have done it from the beginning of time.”
Michelle Casper, senior public relations director for Lands’ End, wrote to News 3 in favor of the new measure.
“The Marketplace Fairness Act will level the playing field between all retailers; regardless of how they connect with their customers,” Casper wrote. “The bill will allow customers to shop with us however they choose and corrects a system that has given significant and unfair competitive advantage to a handful of online-only retailers.”
Lands’ End already charges sales tax online because it has a physical store in Wisconsin.