Working to Get it Right: Efairness for Small Businesses

photo 1Potomac River Running first opened for business in the spring of 2003. Two young families with a passion for running wanted to create a resource for runners in the Northern Virginia region, so they banded together and opened two shops to serve their communities. Twelve years on, the company has eight doors and the passion for delivering great customer service to thousands of runners remains the foundation of our business.  During this same time period the evolution of the internet has forever changed the landscape of retail, but areas remain where the internet alone is insufficient.

Ever since the first specialty running store opened its doors, businesses like ours have helped solve problems on an individual basis.  With studies placing the running injury rate on an annual basis between 40-56% for each runner, sitting down with a customer to discuss injuries, goals, running background and other factors is a critical step to ensuring that the footwear being selected by an individual matches their unique needs.

From a mechanical perspective, everyone is built slightly differently, and as a result, has different needs. Is your foot slightly narrower in the heel than average?  Do your arches flex significantly when full body weight is applied?  Is there rotation in your tibia & fibula when you run, and if so, to what degree?  All of these are questions that the internet can provide answers to in general terms, but there is still significant guesswork involved.  Our stores, and stores like ours, make it a priority that all staff are not only capable of answering these questions, but the ones that the consumer might not be aware to ask. In the analysis of recording someone running, the conversation about history and goals, the process of narrowing down the correct shoe size and type, we offer something that simply cannot be achieved by navigating a website.

Given that our process is our product, we always work to get it right, even if that means the customer has to try out a pair of shoes for a run or two before they know for sure that the shoe is for them.  We take pride in helping people, and our stores and many like ours give back to the local community by sponsoring youth track events, hosting races, offering training programs and free group runs.

We often have folks come in, spend half an hour with our staff and then leave with the intent of buying online to avoid paying sales tax. There is room for both local retail and online in the running community, but incentivizing the use of one over the other by allowing a loophole in tax law to remain is unfair to small businesses, as well as to customers. Congress has an opportunity to put local and online businesses on equal footing with the recently introduced Remote Transactions Parity Act of 2015, which closes the online sales tax loophole by requiring online retailers to collect sales tax.  Small businesses run an economic race against other businesses every day – it’s not fair to let online competitors have a head start.

If you are in the Washington, D.C.,-Northern Virginia area, stop in and check out our store. You will be offered excellent service, excellent products, and you will also find us proudly supporting efairness in our windows.

Home Is More Than a House: Supporting the Businesses that Make Up Your Community

lButler4539When you are asked by a new acquaintance where you’re from, what do you think of? Do you think of your childhood home? A fond family memory? Your teenage hangouts? For most people, it’s a combination of all these and more. A person’s home includes every aspect of their community, including the local businesses. They provide each community with a unique character, something you can’t find anywhere else. A community without a vibrant local business presence lacks cohesion; simply put, local businesses hold a community together.

As the head of my local chamber of commerce, I witness brick-and-mortar retailers in action every day. Early morning gathering places like Bluestem Bistro and Daylight Donuts help Manhattanites wake up with fresh coffee and sweet donuts, the local news playing in the background as people start their day by checking in with their friends before work. After preparing for the day, many people go to work atthese local businesses. From selling running equipment at Manhattan Running Company to catching a showing of Rent at the Manhattan Arts Center, local businesses in Manhattan provide jobs for our friends, family and neighbors. When we have a question about a new product or service, we go to the closest experts available: the people who run our local businesses.

The economic benefit of small businesses cannot be understated, either. Local businesses bring money into a community’s economy, support our families and help raise funds for charities and nonprofits. Local businesses also provide stability for communities when larger companies move their operations. I’m proud to say that nine out of ten Manhattan Chamber members are small to mid-size, local businesses.

However, many of our local businesses have taken a hit due as a result of our outdated sales tax framework. My members routinely voice their complaints that customers visit their stores, look a product over and then leave to buy it for less online because online-only sellers are not required to collect the sales tax. I am a firm supporter of a free market – and that means all businesses need to compete on a level playing field. Businesses in Manhattan and all across the Sunflower State and across America are more than happy to compete on price, inventory, quality and service. But they cannot compete on sales tax.

I urge our Congressman, Tim Huelskamp and the rest of the Kansas congressional delegation to support the Remote Transactions Parity Act (RTPA) of 2015. RTPA closes the online sales tax loophole, but more importantly, it levels the playing field for small businesses in communities across the country. And that is a good thing.

Lyle Butler is the CEO/President of the Manhattan Area Chamber of Commerce.

Local Sales Tax Supports our Community Events and Amenities

John StrongLast weekend many families like mine celebrated the Fourth of July in our local community by watching the annual parade and fireworks, attending community-sponsored concerts and events, or hosting their own BBQs.  I couldn’t help but think about all the logistics, time and money that go into planning a day celebrating our great nation’s independence. As an owner of an 80-year-old family-owned small business, Economy Plumbing Supply Co. in Indianapolis, I understand that the sales tax I collect from my customers at the point of sale supports my town. The annual Fourth of July parade logistics, the road closures and even the fireworks are paid for by sales tax revenue collected by local retailers like me. And these events are managed and protected by our first responders who work long hours and are often understaffed and under-supplied due to local budget cuts. I feel honored to contribute to my town, but an outdated sales tax system threatens not only my business, but our entire community.

Today, local brick-and-mortar retailers like me are suffering from a severe disadvantage that is threatening our ability to compete in today’s marketplace. Our current sales tax laws are strictly enforced on brick-and-mortar small businesses like mine, while online-only sellers – often selling the same products to the same consumers – are not required to collect sales tax at point of sale. The sales tax burden falls on the consumer to remit his or her sales tax directly to the state if the online retailer doesn’t collect it. This transaction rarely happens, and as a result, our local communities lose much needed revenue.

Did you know that the sales tax revenue collected by local small business owners like me provides jobs for our first responders? Firefighters, medics and police officers’ salaries are all paid by revenue collected from sales tax. These important first responders keep our communities safe, and our local residents protected. It is critical that we continue to protect their jobs.

Sales tax revenue also supports community organizations and charities, helps to maintain roads- keeping our cities and towns vibrant, and helps us fund community events, like the yearly Fourth of July festivities. In order for our communities to continue to thrive and flourish, local small business owners need a fair and level playing field to compete, which in turn, supports our first responders and community organizations.

Right now Congress has the ideal opportunity to protect small business owners, first responders and local communities by passing recently introduced efairness legislation – the Remote Transactions Parity Act of 2015 (RTPA). I encourage Congress to allow our local communities to continue to be protected by our essential first responders, and enjoy the services they provide us.

John Strong is the President of Economy Plumbing Supply Co. and the Chairman of the American Supply Association.

It’s more about protecting a false competitive advantage than difficulty in collecting sales tax

LanceMuzslay_and_KarenSeymour PhotoAs a small specialty retailer in Arizona, we put tremendous effort into connecting with and supporting our community. We have very knowledgeable staff who love to help runners and walkers determine which shoes work best for them, troubleshoot overuse injuries and train optimally for running events. We have been recognized as one of the top specialty running stores in the country the past 3 years. We are happy to compete against other stores, both online and brick-and-mortar, on the basis of service, convenience and price. However, there is one thing which we are legally prohibited from competing on: sales tax collection.

As a brick-and-mortar business we are required to collect sales tax on all purchases in our stores, and that averages over 8% in Arizona. When an Arizona resident purchases the same merchandise from an online retailer located outside of the state, sales tax is not collected.  As the manufacturers’ prices are usually identical across competing stores, and shipping for running shoes is virtually always free, the only difference in bottom line cost between our store and our online competitors is the sales tax. For a $120 running shoe, the total sales tax ends up being about $10 which is enough to motivate many customers to shop online instead of at a local store. That effective discount enjoyed by our competitors is essentially mandated by current law.

We have found that a customer can stand in our store, order shoes on their smartphone from an online competitor and pay 8% less than the law allows us to charge even though the list price is identical in our store. If this were a 100 meter running race, it would be equivalent to allowing some runners to start eight meters ahead of their competitors. When the marketplace is distorted by laws that give one group of businesses an advantage over competing businesses, that is the epitome of unfairness and it’s long overdue to be rectified. This issue has nothing to do with brick-and-mortar retailers complaining about competitors that sell products at lower prices. This is all about existing law which mandates that brick- and-mortar retailers collect taxes while their online competitors have no such requirement. Local retailers just want the government to stop distorting the marketplace with unequally applied sales tax laws.

Even though we are primarily a brick-and-mortar business, we have had an online store since we opened eight years ago. The most common complaint I’ve heard from online retailers is that requiring them to collect sales taxes would be too difficult and costly because there are thousands of different sales tax jurisdictions around the country with differing rates. Such complaints are vastly exaggerated. An excellent analogy to calculating and collecting sales tax is calculating and charging shipping rates. Most online stores offer various shipping options which involve more variables than sales tax does. For example, shipping cost is determined by weight, shipping address, method of shipment, box size and other variables. Due to its complexity the calculation is often done by integrating the website directly with the computer systems of the shipper such as FedEx, UPS and the United States Post Office. The same basic technology would be used in the calculation of sales taxes. Opponents of efairness legislation often make it sound as if online sellers would need to manually look up the rate for each transaction. They don’t need to do that for calculating shipping rates and won’t need to do it for sales taxes thanks to modern software and computer capabilities, which ironically enough is the very foundation on which they built their businesses.

Opponents of efairness legislation claim that modifying their websites is an enormous challenge. Yes, there is an element of truth there, but to be an ecommerce business by its very nature requires the ability to upgrade a website as technologies change and evolve. For example, just a few years ago there wasn’t very much emphasis on making websites adaptable to viewing on smartphones and tablets. With the growth of those technologies, being able to adapt an ecommerce website is essential. In fact it’s now so critical that on April 21, 2015 Google started penalizing non-mobile friendly websites in their search results rankings. That is a deadly penalty to pay for an online retailer that is unwilling to evolve their website. It’s not uncommon for an online store to do a complete makeover of their site and migrate to a completely different platform in order to keep up with evolving technology.

In 2013, we went through the migration process ourselves as we realized our old platform was incapable of becoming truly mobile friendly. One of the criteria in selecting a new platform was that it be capable of integrating with sales tax collection services so that we would be prepared when such a law goes into effect. Any online retailer that makes a platform change or has done so in recent years while ignoring this facet is woefully naive. If a small brick-and-mortar retailer (such as us) with limited resources and a one person IT department can plan for an eventual remote sales tax collection requirement, then so can the more sophisticated online stores.

Online businesses claim that implementation of efairness legislation would cause them significant harm. On the contrary, brick-and-mortar businesses have already been placed at a disadvantage for many years as the government subsidized discount scheme enjoyed by online stores has unfairly encouraged consumers to shift more of their shopping away from community stores. Local stores simply want a fair shot at competing with their online competitors based on service, convenience and price. To refer back to the 100 meter dash analogy, we’re asking to have our competitors stand on the same starting line so that we can have a fair competition in the retail marketplace. Let the strongest businesses prevail based on their own merits, not on an outdated tax system.

Lance Muzslay is the co-owner of Sole Sports Running Zone in Tempe, AZ.

Small Business Owners: Influence Congress to Take Action on Sales Tax Fairness

On June 15th, Congressmen Jason Chaffetz (R-UT) and Steve Womack (R-AR) introduced The Remote Transactions Parity Act. This bill is critical to closing the online sales tax loophole and creating a level playing field for local retailers.  We are thrilled with the leadership they have shown on this issue in the House of Representatives. But, will we see this bill passed? Many Americans understandably have an extremely cynical view of Congress and its ability to get things done. In fact, according to a recent Rasmussen poll, 66% of constituents believe that their elected officials in Congress don’t care what they think.

As a small business owner, you may be one of these Americans. However, as one of the top groups perceived to be giving back to their communities while also achieving the American Dream, small business owners are primed to cultivate relationships with their elected officials and become one of the most influential voices – particularly on sales tax fairness issues.

Are you still unsure that this opportunity exists? In a 2013 study conducted by the Congressional Management Foundation and Society for Human Resources, 95% of U.S. House Representatives said that “staying in touch with constituents” was the most critical component of their job satisfaction and effectiveness. Additionally, the report found that Representatives spend less than 20% of their time on political and campaign work. Still not convinced? In another Congressional Management Foundation study, Congressional staff said that constituents who make the effort to personally communicate with elected officials who are undecided on an issue are more influential than lobbyists or news editors.

So what does this mean? This means that your elected officials are open and willing to hear from you about your position on sales tax fairness and your vital role in the community, if you make the effort. Members of Congress need to hear directly from small business owners about the importance of efairness to job growth, how small retailers strengthen our communities, and the positive impact you make on your local economy. Here are some simple ways you can get involved:

  • Email your member of Congress
  • Tweet your members of Congress
  • Call your members of Congress

 

After you’ve taken action by emailing, tweeting and/or calling your member of Congress, you can continue to show your support for efairness by submitting an opinion editorial or letter to the editor to your local newspaper.  Here are some samples that you can customize:

 

When it comes to government, you can either play in the game or sit on the bench. Either way, Congress will make decisions that impact your business. Don’t let cynicism silence your voice.  Let Congress know that it’s time to support local businesses like yours and pass sales tax fairness legislation.

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