Retailers ask to level playing field with Internet sellers

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It’s called the Amazon bill. It’s a proposal aimed at bringing in the millions of sales tax dollars currently not being collected on Internet sales. But it’s a complicated issue that may only be resolved by federal action.

Rep. Greg Davids (R-Preston) sponsors HF1849 that begins to attack the issue by putting a definition to the term “solicitor.” Heard by the House Taxes Committee, which he chairs, no action was taken on the bill. There is no Senate companion.

Retailers having a physical presence in the state collect sales tax under current law. But some definitions need clarification in these days of so-called “cloud” sales. It may be obvious that “physical presence” means having property or employees in the state … including “an affiliate, agent, salesperson, canvasser or solicitor.” But the word “solicitor” isn’t clear in its meaning.

The bill provides that definition to include residents “who directly or indirectly refer potential customers to a seller through an Internet website or similar link for commission or other consideration.”

Other states have passed similar legislation.

Brian Steinhoff, president of the Minnesota Retailers Association, said leveling the playing field with Internet sellers is the organization’s No. 1 issue.

State retailers are at an unfair disadvantage because they have to charge sales tax on the purchase, and that can be a deterrent to a customer.

Michael Drury owns a furniture store in Fountain. He explained that people use his business as a showroom before doing a price comparison. Because of the sales tax that needs to be collected, the customer opts for online retailers. “These are transactions for rooms of furniture and the amount of sales tax becomes a big issue,” Drury said.

The bill would apply only if the retailer has at least $10,000 in gross receipts from Minnesota customers who were referred by solicitors.

According to the Department of Revenue, if enacted, the General Fund could see an additional $3.9 million the first year.