Support for online sales tax legislation gains momentum

MONTGOMERY, AL (WSFA) - The National Retail Federation is in the midst of a 60 day campaign, raising awareness about an online sales tax loophole. As it stands now, only online retailers who have physical operations in a state have to charge customers sales tax.  Customers are supposed to pay those taxes when they pay their income taxes.  However, many people aren't aware of that, and it is difficult to enforce.

Traditional brick and mortar store owners say they are losing profits because the law puts them at a disadvantage.  And the State of Alabama is losing as well.  UAB released a study earlier this year, showing that Alabama stands to lose $1 billion dollars in online sales tax revenues over the next five years unless the current law changes.

That's why Governor Robert Bentley and several governors all over the country are urging Congress to pass legislation to force all online retailers to charge sales tax.

George Wilder is the owner of the Locker Room, a men's fine clothing store in Montgomery and Auburn.  Wilder says the current law favors one type of business over another.

"It's very simple," Wilder said.  "It's either fair or it's not fair.  And right now it's nor fair.  If you buy a sport coat from us, for instance, you have to pay for the coat and the 10% sales tax.  But if you buy it from a store online, they say, you can buy the coat, but we won't charge you the sales tax.  And that's just not a level playing field."

Support for the online sales tax changes is gaining momentum across the country, but they're facing some pushback from conservative lawmakers including some from Alabama.

"[Representative] Martha Roby is very much in favor of leveling the playing field.  Our Senators, on the other hand, felt like it was going to be construed as a new tax.  That we're going to tax Internet sales.  But, you're already supposed to pay online taxes.  It's not a new tax," Wilder said.

In response, a spokesperson for Rep. Roby told us, "Rep. Roby is aware of the arguments on both sides of the issue. She continues to evaluate the specifics of the legislation as it works through the committee process."

Nancy Dennis, from the Alabama Retail Federation echoed his comments. "We're not adding a tax.  This is a tax that is already owed.  It's a tax that is just not being collected.  We want it to be collected across the board.  It should matter where you buy something.  If it's a tax that is owed, it should be collected at the time of purchase," Dennis said.

Dennis says she feels confident that Congress is listening to their concerns.  "We have been pushing for this.  Governor Bentley has been pushing for this, and we are hoping there will be some kind of vote in Congress before the end of the year."

Wilder says until then, he and other brick and mortar store owners will be forced to operate in an unfair sales tax environment.

"We need people to do business with the stores that are investing in your community.  The people you go to church with, the people who sponsor your little league teams, and who donate to the United Way.   We are the heart and sole of the community.  We Main Street Retailers just want to level the playing field.  To make sure that if you buy it from us, or from whatever dot-com, it's the same," Wilder added.

Those against the change argue it would be difficult to enforce.  Retail leaders, however, say the technology is already there.  There is simply not a law in place that forces retailers to put that technology into use.