E Biz Isn't Getting A Free Ride On Taxes

Mike France is wide of the mark in "A Web sales tax: Not if, but when" (Legal Affairs, June 21) when he claims state and local officials have been willing to let tax collection slide and that online marketers are getting a free ride.

The reality is that retail, catalog, and Internet merchants are now treated the same: Where they have a physical presence or "nexus," they collect from customers. Web merchants do collect taxes now in places where they have such facilities--and they are collecting such taxes from online customers in those jurisdictions. The Internet tax moratorium has not halted such collections.

Courts have backed direct marketers on two grounds: First, that it's taxation without representation where a merchant has no physical presence; and second, that cross-border tax collection is an interstate commerce issue that only Congress can regulate.

Courts also have rejected the states' creative theories that using 800 numbers, having money-back guarantees, and exhibiting at trade shows for short periods of time create situations where catalogers are liable for tax collection.

So far, there has been no successful effort by states and localities to simplify tax codes for any businesses that might be willing to collect and remit based on a streamlined format. Tax harmony remains an elusive goal.

We wholeheartedly agree that, for Internet-based commerce and perhaps on all types of commerce, a forward-looking tax policy is needed for the 21st century, and not one based on Depression-era thinking that has propelled the proliferation of regressive sales taxes.

Roscoe Starek

Direct Marketing Assn.