Solution sought for sales tax 'loophole'

Some small business leaders describe competing with online retailers as fighting with one arm tied behind the back.

Local firms must collect the state sales tax, but online transactions often forgo the sales tax, West Pasco Chamber of Commerce President Joe Alpine complained.

Some state lawmakers based in Pasco County believe the ultimate solution might lie with the federal government because of the patchwork of sales tax rates across the country.

One downtown New Port Richey merchant wants some type of federal clearinghouse to simplify the collection of sales tax on out-of-state transactions. Rob Marlowe, who operates Gulfcoast Networking, is a New Port Richey city councilman.

"I sell them a new computer or computer hardware, I have to collect sales tax on it," Marlowe said. "If they buy it from some Web-based site in California, sales tax is not collected."

The chamber passed a resolution "to end the Internet sales tax loophole." Chamber board President Christopher Dunning signed the document, which was sent to lawmakers and the Florida Alliance for Main Street Fairness, a coalition that includes the Florida Chamber of Commerce.

"Those small businesses invest in our community," Alpine said. "They're risking their capital, their money, in hopes of making a profit. Are these Internet providers going to help build our roads? Build our schools? Buy tickets to the charitable events in our community? No."

Some shoppers look over a product at local stores and then buy it online in hopes of avoiding the sales tax, Alpine said. Stores end up being treated like a showroom.

"It needs to be an equal playing field," he said.

"Without a doubt this is an enforcement issue that ultimately can only be fully resolved if the federal government weighs in," state Rep. John Legg, R-Port Richey, said in an email.

"Currently, Florida sales tax does apply to Internet sales," he said. "However, enforcement in collecting those taxes from out of state sellers is not possible in many cases because of past U.S. Supreme Court decisions."

Legg added, "We need to be cautious about the economic consequences of any plan that would disadvantage Florida businesses."

Marlowe said most of his trade is local, although his business conducts a few online transactions with out-of-state customers. He did not charge sales tax on a sale to a Kentucky client.

Marlowe said he would be "overwhelmed" if he had to register as a sales tax collector in all 50 states. Most small merchants could be buried in paperwork, he said, especially since the amount of sales tax varies from state to state and even county to county.

He envisions a federal clearinghouse where merchants would remit the sales tax on out-of-state sales.

"Let's make it idiot-proof and simple," he said.