With catalogers today marketing their goods through a variety of channels, marketers should carefully evaluate each channel using an internal auditor or an outside tax expert to determine the necessary steps to effectively and fairly calculate and remit sales taxes. Start by asking a few key questions about yourself and your organization: * Are you confident your organization is on top of state and local tax requirements? * Are you concerned about the tax administration and management practices of a company you recently acquired or with which you’ve merged? State and local tax legislatures change frequently. The revenues from tax
During a Direct Marketing Association seminar last week, marketers alike tried to wrap their arms around just what New York state’s new Internet tax law means for their businesses. Jerry Cerasale, the seminar’s host and senior vice president of government affairs for the DMA, and the organization’s tax counsel, George Isaacson, provided the 85 members in attendance with answers on what this development means for their industry. Here’s a sampling of some of the tips, thoughts and observations gleaned from the event: * “This is very aggressive, nexus-expanding legislation,” Isaacson said, referring to the law which requires out-of-state online retailers to collect sales (or
Over the past few months, we at Catalog Success have been hard at work to further develop a hefty well of research data for our readers. In October we launched the Catalog Success Latest Trends Report, a quarterly series of original benchmarking research we’ve been conducting with the multichannel ad agency Ovation Marketing. In the coming months, we’ll also be running a series of mail volume charts provided by several catalog co-op databases. Like the Latest Trends surveys, these will run in the IndustryEye section of our print magazine. And for the past year or so, we’ve been running a regular reader poll.
Catalogers can’t reduce their nexus exposure unless they first identify their nexus risks. Many CEOs and CFOs are unaware of their own company’s various affiliate marketing programs, cross-promotion initiatives, vendor drop-ship relationships and other activities that carry a nexus risk. Senior managers also may be lulled into the false belief that a relatively small amount of in-state activity isn’t enough to cross the nexus threshold. Even a very limited physical presence in a state, however, may be sufficient to create a tax-collection obligation on all sales to consumers in that state. Therefore, every cataloger should undertake a nexus self-audit. Attorneys and accountants
Appearing on behalf of the DMA in early December, George Isaacson testified before the U.S. House Judiciary Subcommittee on Commercial & Administrative Law in opposition to bill H.R. 3396, the Sales Tax Fairness and Simplification Act. The bill, introduced last August by Rep. William Delahunt (D-Mass.), would make interstate sales tax collection mandatory, regardless of whether the seller has a physical presence or “tax nexus” in the taxing state. Isaacson argued that if enacted, the bill would “seriously jeopardize the continued growth of e-commerce in the U.S.” Referencing the Streamlined Sales Tax Agreement (SSTA) included in the legislation, Isaacson called the bill “fundamentally
Tax-savvy multichannel marketers know “nexus” isn’t a new hair product or a high-priced automobile. The term “nexus” (derived from a Latin word meaning “to connect”) refers to the amount of contact an out-of-state retailer must have with a state before that seller is legally obligated to collect sales tax from customers. The Supreme Court’s landmark Quill v. North Dakota decision in 1992 made clear that, under the Commerce Clause of the Constitution, the nexus standard requires an in-state physical presence on the part of the retailer. In other words, mail order sales alone will not subject a remote seller to sales or use-tax collection
In the IndustryEye section of this issue on pgs. 12-13, you’ll find our second quarterly Catalog Success Latest Trends Report, a benchmarking survey we conducted in late November in partnership with the multichannel ad agency Ovation Marketing. This one focuses on key catalog/multichannel issues, and we’ve included most of the charts there, so I encourage you to take a look. You’ll be able to find some charts only on our Web site due to magazine space limitations. We also didn’t have the space to include the numerous comments that you — our readers and survey respondents — wrote in response to two of the questions.
For as long as I can remember, legislation that would either lead to a law similar to the “do-not-call” law or that would require mailers to get consumers’ approval before sending them catalogs has been like one of those disasters you only see in the movies or TV. It could never happen in real life, no way. There often have been flashes of “do-not-mail” bill proposals, but nothing has ever become of it. Such a law is one of the biggest reasons American catalogers don’t try to mail in countries like Italy and parts of China, both of which specifically require prior consent
Beginning with our January 2008 issue, veteran direct marketing tax attorney George Isaacson will join our distinguished panel of columnists with a periodic column devoted primarily to tax issues affecting catalogers and multichannel marketers. To lay the groundwork for his column, in this issue he offers an overview of key legal issues affecting catalogers and other direct marketers. His columns next year will delve more deeply into the specific issues. Sales & Use Tax (Nexus) State revenue departments have stepped up their efforts to require catalog companies and Internet merchants to collect state sales and use taxes. To impose such collection obligations, state tax auditors must
Cybersquatting Cybersquatting occurs when a person registers an Internet domain name that incorporates a famous trademark and then “squats” on it until an opportunity arises to profit from ownership. Until the late ’90s, it was unclear whether existing U.S. trademark law prohibited this practice. But in 1999, ICANN, the organization that functions as the de facto governing body of Internet infrastructure, rolled out a contractual method for resolving disputes over ownership of domain names. One of the current requirements for registering a domain name is that the registrant agrees to submit to an alternative dispute resolution process to determine whether it’s entitled to