Local retailers push to level the online playing field

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Following a recent U.S. Supreme Court decision, some business owners are calling for state legislation that they say would level the playing field between in-state and out-of-state online retailers.

The high court’s June 21 decision in South Dakota v. Wayfair (see box, page 7) now allows states to require out-of-state retailers to charge sales tax on online purchases — and local retailers want New York to ensure that the tax is added regardless of which sites online shoppers buy from.

Steve Warshaw, vice president of the Glen Head-Glenwood Business Association, said that such legislation would keep more money local. “You’re not getting the aggregate buying power of an Amazon,” he said. “You’re getting a better service that’s reasonably priced.”

On July 16 — Amazon Prime Day — dozens of business owners gathered in Plainview to rally for a state law mandating the inclusion of the sales tax. They also pushed for websites like Amazon, Overstock and Wayfair to implement the tax before legislation forcing them to do so is passed.

Rally-goers argued that if all online purchases in New York included sales tax, homegrown retailers would be better positioned to compete with out-of-state retailers like Etsy and Zazzle, which can undercut local competitors’ prices.

With strong support from a number of state and local legislators, business owners said they were confident that such legislation wiould be approved, and were hoping for a special session to address the issue before lawmakers reconvene in January.

Michael Harrison, president and CEO of Axcelsior Strategic Solutions and a Chamber of Commerce consultant, said that the current state of affairs “creates an un-level playing field.” “We need legislation to be able to begin, and the South Dakota law should be a model,” he said.

The law passed in South Dakota after the high-court ruling has stipulations: Out-of-state online retailers can charge the tax only if they clear $100,000 in sales or have at least 200 transactions with customers in South Dakota. New York’s law should be as simple to follow, Harrison said.

Nassau County Executive Laura Curran said the ruling “gives a tremendous boost of confidence to local businesses that struggle to compete with internet commerce.”

Nassau County Legislator Arnold Drucker, who attended the rally, explained that a mandated online sales tax could help Nassau and Suffolk counties shrink their budget deficits. “It would be a win-win all around. It would be a win-win for the state, for Long Island and for the community,” Drucker said. “America was built on brick-and-mortar stores. They are the middle class, and we’ve gotten away from supporting them. This could be a wake-up call to support local businesses.”

Other reactions to the Supreme Court decision, and its implications, were less optimistic. Dimitri Schidlovsky, co-owner of the Sea Cliff-based business Hook Life, said he was “anxious” about sales-tax legislation, contending that smaller businesses wouldn’t be able to afford the additional tax. “We’re going to get crushed,” he said. “A large portion of our business uses the internet model, and there’s viability with the internet.”

Schidlovsky also said he believed that codifying state law to mirror the federal ruling would hinder local businesses in a market that is inherently “freer” than traditional, face-to-face commerce. “I’m anxious about having any more burdens put on the market,” he said. “The beauty of the internet is that it gives people access to a market that’s a little freer.”

James Gazzale, a representative of the state Department of Taxation and Finance, said last week that state officials were reviewing the Supreme Court decision.