Online Retailing Expert Proposes Amendment to Laffer’s Argument

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Nate Lind Fights for Single Internet Sales Tax Rate Per State

Sales tax collection is fine, but not for 10,000 unique jurisdictions

Online retailing expert Nate Lind is warning taxpayers and legislators to do their homework before embracing the Marketplace Fairness Act in its current state.

According to Lind, online direct-to-consumer (DTC) marketing expert and Managing Member of electronic retailer SND Holdings, LLC., economist Art Laffer’s new proposal that the U.S. should collect sales tax on online sales properly and use the cash income to reduce personal income tax rates isn’t too far off the mark, but will only succeed if the Marketplace Fairness Act is amended.

“Sales tax collection is fine, but not for 10,000 unique jurisdictions,” says Lind. “The bill, as it stands, is far too vague and leaves too much open for interpretation.”

Lind and other online retailers are bracing for the challenges of implementing the Act’s Internet sales tax, which requires Internet and catalog retailers doing revenue of $1 million or more to collect taxes wherever they have customers—in nearly 10,000 different tax jurisdictions.

“That’s enormously burdensome,” says Lind. “Imagine the consequences.”

Eschewing a single set of definitions for taxable and exempt products for all states, the act requires states to create their own definitions for taxable goods and services, as well as unique definitions for key terms like “sales price”.

“Let’s say you’re a retailer selling hats and shoes,” says Lind. “If the current incarnation of the Marketplace Fairness Act passes the House, 46 different states could define whether hats and shoes, combined or separately, are taxable or not; thus, you’d have to collect taxes on either hats or shoes or both hats and shoes—in 10,000 different localities.”

The 11-page bill also has no single audit process, giving 46 different states the ability to impose audits on any online retailers in the states where the retailers abide.

“It’s a nightmare for personnel, accountants and everyone else involved with online retail,” Lind explains. “Every employee I hire in a non-revenue-adding function, such as accounting, human resources or compliance, is one less employee I can hire in marketing, research and development and operations, which increases my revenue base.”

In his new study, Laffer says the bill can help brassic states pump up their budgets. He argues the plan isn’t creating a new tax; rather, it grants states the ability to retrieve taxes already owed. Lind begs to differ.

“If Laffer thinks states will use new sales tax revenue to reduce income tax during the current budget fiascos, it’s either altruistic or idiotic, but in either instance, it’s not realistic,” he states.

The bill passed the senate in May, but is likely to see greater opposition in the GOP-controlled House. White House spokesman Jay Carney has said that President Obama supports the bill. Unless it is amended first, however, Lind predicts trouble.

“Do not continue with the bill as-is and give local jurisdictions the responsibility of setting additional rates,” he warns. “It will be disastrous.”

“I have long supported a single tax rate per state, but rather than push this bill through in its current incarnation, simplify it one more step—make sure it's a single state rate,” he adds.

ABOUT SND HOLDINGS, LLC.

SND Holdings, LLC. is a holding company of multiple consumer product brands that develop and sell scientifically-formulated nutritional products to enhance healthier lifestyles in the healthy aging and weight-loss markets through global direct-response online marketing. Formed in 2011 as a New Mexico limited liability company, SND Holdings is headquartered in Albuquerque and currently employs 15 full-time employees and one contract employee.

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Lisa Brown
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