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tv   The Communicators  CSPAN  December 18, 2010 6:30pm-7:00pm EST

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wheelchair is now facing eviction because she signed a loan for 331 and within a year, it was $1,400. >> mr. kowalski. >> i read for a week that treasury out-sourced an opinion letter to a banking law firm to issue an opinion as to whether or not the hardest hit funds could go to legal aid groups and h.u.d. counselors to assist with foreclosure prevention and not surprisingly the banking law firm gave -- i'm not sure why the treasury lawyers couldn't do this work, but the banking law firm gave the opinion to treasury it couldn't. of course it can. the only system we've been able to develop in florida, at least, is a cooperative agreement between the legal services groups, h.u.d. counselors, who are properly aware of what's going on with these loan mod fantastics, and pro bono
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lawyers working in cooperation with the judiciary. the florida stream court traded the entire judicial foreclosure system for example. it needs to be strengthened, not abandoned. it is not voluntary. it is tied to t.a.r.p., it was always tied to t.a.r.p., and h.u.d. regulations make it clear it is tied to t.a.r.p. at the end of the day, the servicers are all regulated by the federal government. the servicers make all of the decisions. the servicers decide when loan modifications work, when foreclosures are pushed through, and those are all federally regulated agencies. >> so you are saying it is tied to the t.a.r.p. funds. in return for handing him the money, you have to go out and work on h.a.m. >> if you would like to watch this program in its entirety,
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log on to c-span.org. >> tomorrow on "newsmakers" representative ron paul talks about his agenda as incoming chairman of the subcommittee that oversees the federal reserve. that's at 10:00 a.m. and 6:00 p.m. eastern here on c-span eastern. >> this week on "the communicators" our guests are scott peterson and jarey serasel of the trect marketing association mplingt -- soigs. -- association. >> one of the policy debates happening in state capitals around the united states is the issue of internet sales tax. that's our topic this week on "the communicators." we're joined by scott peterson and jerry serasel, senior vice
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president of government affairs. thank you for being here. tell us, first, what the streamlined sales tax governing board is and what's your position on the issue of tacking sales on the internet. >> the stream lined sales tax governing board is to get all the internet sales tax on the board. >> our issue is, it is not a tax issue, it is a correction issue, and how you correct the problem. the issue stems from out-of-state marketers, can they be forced to become sales tax collectors for a state they have no presence in?
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the supreme court has said no, and because it is so complicated it interferes with interstate commerce, and scott's group is trying to simply identify that. -- simplify that. the question is, can a state force an out-of-state retailer to become a collection agent. >> so your organization does not have a problem tacking an amazon sale, for example? >> if you are in a state that collects sales tax, taxes are owed. we have to follow the law. that's the law of the land where the state is. the question is, how is it collected and who collects it and so forth. >> mr. peterson, do you estimate that states are losing revenue because of internet sales? >> yes, internet and catalogue sales. there are still an awful lot of
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catalogue sales in the country. we estimate that the states will fail to collect $20 million this year, and we're very concerned that with the really successful way that the internet has changed retailing, that >> we also have with us grant gross, i.d.g. news service, washington correspondent. >> one of the reasons it has not gained a lot of traction in congress. >> i would agree with you.
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there hasn't been a lot of traction in congress, because it is an odd issue for congress to deal with. we're asking congress to give states more authority. and this -- i mean, my employer, this is a states rights issue. they want congress to grant them more rights than they have under the constitution today, which congress has the authority to do the perception is tax related. we are gaining traction. more than half the states have sales tax. georgia becomes a member january 1. we think we're making progress. we're actively working with the remaining states to convince them to change their law and make their lives easier for retailers. we believe if we change the law, we will have more traction in congress. >> most people that buy online, because you said, that practice
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is growing, more and more people are shopping on line than ever before. they don't pale those sales taxes to the states. when i buy off ebay i don't pay sales tax to my state for my ebay purchases, for example. in essence, it is a tax increase, even if it is an uncollected tax. >> thank you. we don't see it as a tax increase, because you as a consumer have a legal requirement to pay the tax, whether you are charged the tax by the retailers or not. maybe i shouldn't have said that. the majority of people in this country have either a complete lack of understanding of how the sales tax works, or they think this is an opportunity for them to save money on taxes. they don't realize it is a crime not to pay your use tax. while it is not one that's often enforced, it is one -- it is
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truly on the books. if you ask consumers if they think it is fair that a person on the corner store has to charge sales tax but the person in the other state behind the internet doesn't have to, the overwhelming majority of people say, no, that's not fair. they should both have to charge. >> i think a lot of lawmakers in congress see it as a quasi tax increase and would have trouble voting to approve the streamlined sales tax, correct? >> i haven't asked all of them. it is just a states rights issue. if you ask a member of congress do you think your state should have more authority to govern what they do internally, they will often say yes. then you go down and say this is
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one of the things we want them to have more authority to do. we understand there are people that buying the concept of taxa -- that find the con vept september of taxation to be unworthy. all it means is that the person who owns the store gets to carry the entire burden. they have to pay all the sales tax in the state. >> it is unreasonable to ask online retailers to collect these taxes? >> well, the supreme court has said "yes." the supreme court has said it is a burden on interstate congress because it is so complicated. and it still is so complicated. you know, there are 7,500 taxing jurisdictions in the united states. there were that many before scott's group started, and there are that many now. what is tax and what is defined as taxation is all changed.
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and the point is, these are out of state. it's not all sneth internet sales that these are collected for. it is from a company that has no presence within the state, so that they have no employees, no facilities within that state. they have no political power within that state. they get none of the benefit from any of the schools, fire, police, yet they are being asked to become unpaid tax collectors. that, we think, is not fair. we think that puts an unfair burden on them. the taxes in the states -- states do other things to collect tax from the internet and other ways as well. alabama just sent out a letter to everyone, and they received, i think, 1/3 of the people who
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received the letter sent it back, and other states had things -- lines on their income tax. there are ways for states to look at this. rather than throw an expensive burden upon internet and remote marketers. >> mr. peterson, what is your response to that? >> thank you. jerry is correct. the supreme court says the courts don't have the authority. >> and that's from 1982? >> yes. we think everyone has the ability -- the concept of a physical presence doesn't have the meaning back in 1992 or the first time they did this in 1967, because it is so much easier to do business than it was before. fedex, ups, and what remains of the post office make conducting business in this country extremely easy. you don't have to own the merchandise sell anymore.
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you don't have to own the web site that you sell from. you don't have to do almost anything to be a retailer today. and 25 years ago, that wasn't the case. if you wanted to be a retailer in the united states you had to put the money into it, you had to buy a building, you had to keep people employed, and that's not the thing now. i mean there are companies that specialize in fulfillment. i can give you 5% of my sales, and you will own my -- all my inventory, you will be 100% responsible for shipping, all i have to do is send sales to you, and you will do everything else. you can sit in your office in downtown minneapolis and sell all over the united states and never leave your office, never even own the merchandise you are selling. the world has changed. we think that the tax obligation should follow the change. >> aren't there software packages now that would automate
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the sales tax collection? i would imagine they cost a little money. >> they do cost money, and some of them work, and they work to a certain extent. think about it in the following way. you have to change your i.t. so the expenses are very high. so the same issues that the supreme court raised before remain on the cost of trying to do business. plus, they haven't eliminated the need for, somewhat, if you are going to believe what i sent you and so forth, some states are going to want to audit, so you have to get a tax department in your business or wherever it is. so that's a huge issue. you also have tax holidays. in florida, there is a tax holiday. i don't know when it is, but you
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can buy some of those things online, so you have to suddenly know the dates of when you purchased. there are tax holidays, i think massachusetts has a tax holiday just before back to school. that adds another complication to it. states are constantly doing it. i think, in answer to scott, from the point of view of -- it's so easy to become a national or international marketer, it is probably time for the tax code to grow as well and become realized that things are changing. they are starting. we don't think they have gone far enough. but i think that that's a key as well. i don't think the states should sit there and say, well, things have changed, and therefore businesses, you have to pile up all these extra expenses and get
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a tax department, and tax lawyers to learn and worry about what you've collected, if you've done the right collection, getting it off to the right place, and the states not do anything to change this tax code that's based upon political boundaries, which are becoming less and less relevant to an extent in today's marketplace. >> isn't it fair to say that there are software packages today that worked in 1982 when the supreme court made the decision. it may still be a bit unwieldy to collect those taxes. but it's probably quite a bit less unwieldy than it was in 1992. >> yeah, i think the tax code taxes weren't there in 1992, that's for sure, but there were a lot -- there are a lot more
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marketers out there, small marketers, entrepreneurs coming in, trying to make sales. i think the burden is probably even greater, even with the packages. there are so many marketers. the world has changed. you know, if you really simply identified the sales tax, it would be a very different discussion we have. not the taxes, but the collection and how you collect the taxes. in most cases, most of the proposals i have seen have a limit on how small the business is that collects taxes. >> the real start-up would be exempt. as you grow within the upper start-up. the level is not as low as you think to try -- when you have new visitors coming into the marketplace. >> this is c-span's
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"communicators" program. we are discussing sales tax online. our guests are jerry cerasel, and grant gross. also, mr. peterson. mr. peterson, the state of utah recently sent amazon a bill. it is an affiliate that amazon owns in the state of texas. and generally the physical presence test. if you have a physical presence, you have an obligation to create a state sales tax. we have spebt spent the last 20 years trying to determine what physical presence means. we have been to court a thousand times trying to figure it out. if i understand it, and i have not talked to texas or amazon,
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they have a distribution facility in texas that texas now believes creates a physical presence for amazon. and because they have that presence there, that amazon has an obligation to collect their sales tax. and not on an ongoing basis, but texas wants it look back a little, too. >> and it was a bill for like $269 political mill. >> if not more. >> what's the situation on that? >> i think they are going to be in court. >> and it is really a question of -- it is a corporate law question as to whether or not there is enough ownership in the fulfillment center. does that create the nexus where tax is due? and the number is, amazon hadn't been collecting and putting in the taxes, and in fact they lose
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-- there is that tax obligation which will come straight out of amazon, because i purchased it a while back, and you didn't collect the taxes, i don't think amazon will try to go back and collect the taxes from me. >> what is your vie on that issue -- view on that issue? >> it is a corporate law issue. if amazon has a presence in texas, the law is pretty straight forward. there is an obligation for you, because you are an in-state retailer now, and you received all the benefits that the taxes do, you have to become a tax collector for the state of texas, and you have to collect those taxes and remit the proper feaks to the -- whatever the exact title is in texas. >> one of the arguments recently has been the economy, and that right now the economy is sluggish, e-commerce is one of
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the areas that seems to be doing quite well, but you can't risk slowing that down. if you start collecting these sales taxes. what would you say to that? >> 90% of the house holds in this country have broadbapped, so the internet is no longer a baby. it is a very mature adult now. in a short period of time it has become a mature adult. i don't know a soul that intentionally looks for places that don't charge them sales tack. that may be true. maybe because i don't know many people, or i don't talk to many people about sales tax issues, nobody wants to talk about sales tax issues, but i don't believe that having to collect sales tax is going to impact anybody's sales. you can make an argument that
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because i don't have to sales tax today, i have an advantage, and i know lots of retailers that feel they are disadvantaged, but if everyone had to collect, if there is a competitive disadvantage one over the other, that goes away. we would be in exactly the same position where everybody -- it is a neutral, effectyly, economically neutral. every -- i don't believe that will harm the internet at all. frankly, i think it will make the internet better. because a lot of these software packages will become more robust. thever going to get cheaper as more and more people use them. the reason it isn't widespread today, is because having to collect isn't widespread. >> how naul small a business in your view should have to collect. >> well, my ememployers two weeks ago set that at $5,000 in
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remote sales. this is under the main street commerce act. our few is if you make sales less than $500,000 a year, you would not have an obligation to collect an interstate other than where you already have on obligation to collect. >> so a guy that sells items on ebay -- >> they would have no more impact than they have today. >> mr. peterson, whaths let's start with you. what is the main street fairness act introduced by representative delahunt? >> that is authorization from congress to states giving them the ability to require out-of-state retailers -- >> the government wants the ability for their tax law to apply to everyone making sales inside their states. the main street fairness act includes a lot of conditions.
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it only allows the state to have this authority if the state has done all the streamline simplification things. and while we all can disagree that there is enough of those in there, and i think it is a legitimate conversation, you wouldn't be able to get that authority. so new york state, which would today prefer to go to court to get that authority, they would not need anything from the mainstreet fairness act. it would also grant to tribes, tribal governments, and they would get the same authority. it would give retailers the ability to go to federal court, sales taxes which they don't have the authority to do today. it would require states to pay compensation to every retailers in the country, which is something i don't think half the states today pay compensation to retailers. jerry used the phase unpaid retailers.
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they are unpaid tax collectors. this would be an obligation on every state to pay some compensation to retailers. not enough, but it would certainly be much more than many of them are getting today. >> we oppose -- we don't think that it's -- we think it is congress granting the states a little too much authority. one of the things that's an example, not just the unpaid, the stream lined sales tax board has not set what compensation should be. but even going further, recently in an attempt to get the commonwealth of massachusetts to join, there is a -- they came up with a rule on how you figure out sales tax for items where the first $100 are free, and then you charge tax after that. malice mass had a different way to calculate once you go over the $100 threshhold, then the streamlined sales tax board
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agreed, and they gave an exemption to massachusetts. if congress passes the fairness act, as it is now, the governing board, can just change those rules without any input. congress would have lost that authority. we don't think that just cedin that -- ceding that authority is the way to go. let's get some really true simplification there. we don't believe they have it. scott and i would disagree on that, but that's where the discussion should be here. we also disagree that it is $20 billion. we have done some studies that show it is about $4 billion and $5 billion in lost revenues to states. of course the research has said it is $3 billion across the
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country. a reason for that is that a huge amount are business-to-business sales. some of them are pretaxed, they are wholesale type things, so there is no sales tax rolls to that. others, the states really do audit this, so they are directed. and an awful lot of retailers, e-commerce, is done by people who have physical stores within the states and they already collect, because they are required to. so we think that the amount lost is much lower. there isn't a pot of gold at the end of the rainbow. >> we have referenced this case a couple times now. quickly, what is the quill vs. north dakota case from 1992? >> quill was a catalogue sales similar to a staples selling most types of things. and north dakota said, you owe sales tax on what you sold to
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north dakota residents. they should have collected it, and you owe us the sales tax. they went to the supreme court to try to receive it. the supreme court found, and there was a case earlier, but basically they found that this was, in fact, interstate commerce, and it was an interference of interstate commerce because of the burden that north dakota would place on an out-of-state retailer, someone that had no presence within the state. so they said you have a stub substantial presence. the court did also say that congress has the authority or the power to grant the authority to the states to require out-of-state retailers to collect on the sales tax, which is why representative delahunt introduced the main street fairness act. i think that might just -- and scott might disagree. >> scott peterson, do you think we'll see a supreme court case
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called amazon vs. the state of texas at some point? >> you're going to see a -- at least a federal court case with amazon vs. somebody because they are in court right now with new york. they have been in court -- they are in court right now with north carolina, they will be in court with texas, so at some point in time there will be amazon vs. some state that at least gets to a federal court level. >> there have been several state attempts to try to collect these taxes in different ways. you mentioned north carolina, texas, amazon. colorado has tried to collect. wouldn't streamline sales tax method be preferable to these individual state attempts to do different things? >> the states are frying to -- all of them in colorado, the states are trying to define what is physical nexus. physical presence.
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in essence, trying to push the boundaries and find out where the boundaries of those are. that's what the new york case is, that's what north carolina did, that's what rhode island did and has done that. so those are all within the rubric of the quill decision. now, i think we'll see more of that, more attempts. and i think that other states are all watching what happens in new york and in north carolina in the court cases to decide whether or not they want to take that step with this affiliate tax in creating nexus. but in many states, the marketers who have affiliates have just canceled those. in rhode island, they just canceled them. in rhode island, it probably is a loss. they have a tax loss. they are doing this because they lost income to the states at which people pay taxes on. in colorado, it is a -- it is a reporting requirement. so you have to report the names

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