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Bill would put task of collecting tax for online sales in sellers' hands
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Times photo: Anthony Wahl A two-man crew works to pack non-food orders for shipping onto a trailer at the order fulfillment location within Colony Brands, Inc., in Monroe Friday, May 31.
MONROE - What could Wisconsin do with an extra $100 million?

Spending the money wouldn't be hard, but collecting that revenue lost from uncollected sales taxes on goods sold online and by mail-order has proven to be challenging or next to impossible for many states, including Wisconsin.

Local business owners and company leaders are not challenging the state's need to collect those taxes and admit the extra revenue would benefit the state as well as the area economy. But, they say, the collection process that sellers will be expected to use is not going to be a simple one under a pending federal bill, the Marketplace Fairness Act of 2013, designed to help states collect online sales taxes by placing the responsibility on sellers instead of customers.

If the bill becomes law, Wisconsin Department of Revenue estimated the taxes would bring the state an additional $95 million a year, starting in 2015.

U.S. Rep. Mark Pocan, who represents Monroe as part of his 2nd Congressional District, is a co-sponsor of bill. During a visit to Monroe this week, he said the bill will "level the playing field" for small, brick-and-mortar stores whose owners are required to collect sales tax at the point of sale, unlike online retailers. Currently, remote sellers are typically not required to collect sales taxes on their merchandise unless they have a physical presence in the customer's state. Wisconsin customers are liable for declaring and paying the taxes on their purchases from remote sellers, but rarely do.

Small businesses doing less than $1 million in online sales are exempt from collecting those sales taxes under the proposed bill.

But implementing the collection process would be "fairly costly" and "complicated to administer" if the bill passes in its current form, said John Baumann, president and CEO of Colony Brands Inc. in Monroe.

Colony Brands is large enough that the added costs will not increase the cost of individual products, Baumann said.

"But smaller internet, mail order and catalog companies will find it very expensive, unless they can find a way to share the costs," he said.

Initial implementation - installing state-provided software, maintaining it and updating it - all requires additional personnel, Baumann noted. The 9,600 individual tax jurisdictions in the nation, plus rule changes in tax laws and taxable items, further complicate the process, he added.

The U.S. Senate passed the bill May 6, and it is now in the U.S. House Subcommittee on Regulatory Reform, Commercial and Antitrust Law. Sen. Tammy Baldwin voted for the measure, and Sen. Ron Johnson voted against it.

Colony Brands is contacting congressmen, senators and supporters of the bill - as are many companies, both large and small - and asking them to "work out a more simplified process," Baumann said.

"A simpler way would be a more uniform set of rates," he said. "I'd like to see one rate per state or, better yet, one national rate" for online orders.

A simplified rate would be easier for mail order customers, also, he said. Tens of thousands of Colony Brands customers send cash or checks with their mail orders and have no idea what their local tax rates are or which items are taxable and which are exempt, he said.

Duluth Trading Co. in Belleville, which offers work clothes for men and women on its website, declined to comment, "choosing not to join in the discussion at this time," said Caroline Landree, a public relations spokesman for the company.

Downtown Monroe store owners, Val Burington of Burington Shoes and Chuck Radke of Wing'N Pond, neither of whom offer online ordering, agree the bill would help local shops simply by eliminating shoppers' temptation to buy online out-of-state to avoid the cost of Wisconsin sales tax.

"Every little bit helps," Burington said. "The more shopping done locally, the better it is for the local economy."

Radke said if he had online orders, he still would be in favor of collecting the sales tax.

"Isn't it crazy that it isn't?" he asked. "Everybody pays sales tax, and it is far and away the most fair (tax)."

"A sale is a sale, whether it's brick and mortar or online," he added.

Radke said collecting taxes in the multiple tax jurisdictions nationwide is "insane" and complicated.

"A more common sense way of collecting taxes is at the point-of-sale," where the transaction takes place and the money changes hands, just as if the customer were in the vendor's store, he said.

Radke said this "free enterprise system applied to the government" would "force companies to think about where they locate" and be an incentive for state and local governments to "sharpen their pencils" on budgets before increasing sale taxes at the risk economic development.

"Nobody ever thinks to apply it (the free enterprise system) to our government. It's what people in business think about every day," he added.