Legal Concerns for Catalogers ’07: Lawyers Outline Key Use-tax, Gift Card Issues
During a session at the recent NEMOA conference in Cambridge, Mass., George Isaacson and Martin Eisenstein, both attorneys from the Lewiston, Maine-based law firm Brann & Isaacson LLP, pointed out that such recent changes as the shift of power in the House and Senate to Democratic control could revive the use-tax debate. They also touched on some key legal issues involving the rapidly growing gift card market.
During his presentation, Isaacson said that there are several dynamics in play this year that make the federal use-tax issue less predictable than it’s been in the past. “Every year since Quill Corp. v. North Dakota,” he said referring to the landmark 1992 that ruled that direct marketers need only collect sales tax on purchases placed by consumers residing in states where the marketers have a physical presence, such as a store or warehouse, “there’s been legislation introduced to collect tax.”
Although none of them has posed a threat on the federal side, with Democrats controlling both arms of Congress this year for the first time since the mid-’90s, committee chairs have changed, “so control features are new.”
He highlighted other tax issues of note to catalogers. For one, the Internet Tax Nondiscrimination Act (formerly known as the Internet Tax Freedom Act) expires Nov. 21. “That could put into play some kind of deal,” he cautioned, that may affect catalogers marketing online.
Regarding the Streamlined Sales and Use Tax Agreement, whose original goal was to simplify and make more uniform state and local sales and use taxes easier for retailers to collect, the group now has 15 member states. “Early on,” Isaacson said, “state delegates ran into disagreements among one another. Instead, the [coalition] lowered its sights and settled for a few very limited reform measures, such as some uniform definitions. The strategy of the National Governors Association will increase leverage in Congress to reward those states involved. Even with very modest reforms that the Agreement calls for, they’ve already started cheating on it, passing new taxes, not calling them sales or use-taxes. A number of states have used this as a way to increase taxes, including rounding up taxes on shipping and handling.”