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PA online sales tax crackdown hits home

26 January 2012 707 views No Comment

Republicans are against taxes, right? Here in Pennsylvania Governor Tom Corbett is going after online retailers and, by extension, their affiliates in pursuit of uncollected sales taxes. And, this is directly affecting my family and I as three notable online resellers — MacMall, NewEgg, OnSale — have dropped the Fairer Platform as an affiliate.

Not a lot of money, but it all adds up and the loss is being felt. Ouch.

I’m also an Amazon affiliate, which has four fulfillment centers in Pennsylvania, and losing that money would be a slightly bigger blow to my bottom line. Though I haven’t read that Amazon’s threatening to leave, a move that would surely be painful for the world’s largest retailer, the state has set a January 31 deadline for online sellers to start collecting or else.

Something has to give and, with recent events in mind, I won’t be at all surprised if it’s me.

Minding their pennies

I don’t begrudge Pennsylvania’s desire to collect sales tax on goods sold to its residents, that day of reckoning is coming for all Americans, sooner or later. Further, like all levels of government, Pennsylvania’s feeling the budget pinch and uncollected sales taxes are an easy target for this particular tax hating Republican governor, especially when out-of-state companies could be doing his dirty work.

See also: PA Sales Tax Crackdown Means Grief For Amazon Merchants (Forbes).

The problem is, because Pennsylvania’s essentially going it alone, online retailers aren’t thinking twice about not selling to customers in the Keystone State and affiliates are just collateral damage. Yes, this is a large, densely populated state, but vendors’ calculation of pain won’t come out in the governor or affiliates’ favor.

That said, I’m also an Apple affiliate and Cupertino has always collected sales tax, which apparently hasn’t hurt their bottom line. Moreover, they even collect tax on pure play digital goods, like apps, music and movies, which is darned progressive.

Waiting for Congress

So ultimately what’s the rub? The big online retailers want a national sales tax policy in order to avoid a state-by-state, piecemeal implementation and they have shown a willingness to cut and run when individual states threaten action, leaving customers and affiliates in the lurch.

Here’s yet another national problem that won’t be resolved until Congress acts. With many larger and more intractable issues on their plate, however, I’m not holding my breath.

Perhaps Corbett will work something out with Amazon…

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