Posts Tagged ‘DMA’

Another Online Sales Tax Win!

Friday, February 11th, 2011

Posted by: Albert Realuyo, VP of Product Management at Dydacomp

The State of North Carolina has announced it will not to seek personal information related to consumers’ online purchases. Before this ruling was passed, North Carolina wanted online retailers to provide customer information concerning online sales so the revenue department could determine how much sales tax the state was owed for online purchases.

This ruling was made after a court case in which Amazon.com filed a lawsuit against the North Carolina Department of Revenue claiming it was a violation of customer privacy.  The North Carolina revenue department still insists that the state had never intended to use the product information to tie customer information to products they purchased and was simply using the information to help enforce sales and use tax collection. This is a huge win for online retailers as the collection of sales tax by the state would have directly impacted online revenue and business for online retailers. However, residents are still required by law to pay taxes on items purchased online when an online retailer doesn’t charge sales tax, but few residents actually do.

This ruling comes within weeks of the DMA’s win that resulted in an injunction that now prevents the state of Colorado from acquiring customer order information from online retailers to collect sales tax. Amazon.com is currently pulling business from the state of Texas as they were unable to reach an agreement with state officials to avoid collecting sales tax on purchases made by Texas residents. It will be interesting to see how this issue plays out in Texas, especially with the two recent wins for retailers in both Colorado and North Carolina.

Here at Dydacomp, we will continue keep you updated on all important sales tax information as it happens to help keep your business running smoothly and in compliance with the various sales tax laws by state.  You can also click the links for more information on  the Texas and North Carolina rulings.

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Update: Colorado Online Sales Tax

Friday, February 4th, 2011

Posted by: Albert Realuyo, Vice President of Product Management

In July, we wrote a couple of blogs that informed you about the new online tax laws in the state of Colorado. This new law requires all online retailers outside the state of Colorado to collect sales tax information from customers and turn it over to Colorado’s Department of Revenue.  Shortly after the new law was passed, the Direct Marketing Association (DMA) filed a lawsuit in federal court against the state challenging the constitutionality of the law. They feel that the law discriminates against interstate commerce, violates the privacy of consumers and risks the disclosure of confidential consumer data.

Last Thursday, the judge in the case granted the DMA a preliminary injunction, which prevents the state from enforcing parts of the law relating to providing customer data for an indefinite period of time.  This was a win for the DMA as they were able to provide evidence that the law is not constitutional as it discriminates against out-of-state retailers.

What does this mean for online retailers? Retailers who carry out eCommerce (yet are not located in Colorado) have no obligation to provide the state with: a transaction notification at the point of sale; a notification to consumers who live in Colorado; or even a notice to Colorado Department of Revenue. This injunction will stand until the final ruling is made in the case, but there has been no specified date for this yet.

This is definitely a huge win for the DMA and retailers as more and more states continue to create new laws that concern online sales tax, but the case is not over yet.  We here at Dydacomp will continue to keep you up-to-date on any important information that can affect your business. We will also ensure that Multichannel Order Manager and SiteLINK will perform for you so you will continue to be able to adhere to the different states’ approaches to collecting sales tax.  You can also check out more information about this ruling in this article from MultichannelMerchant.com.

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Washington Might Actually Be Listening to You

Thursday, September 30th, 2010

Posted by John Healy, CEO of Dydacomp

John Healy, Dydacomp CEOBelow is a copy of an email I just received from the Direct Marketing Association announcing that the Postal Regulatory Commission (PRC) this morning unanimously denied the US Postal Service’s (USPS) request to enact “exigent” price increases in 2011.  That means the USPS can still raise their rates but only up to the increase in the Consumer Price Index.  By way of background, let me get you up to speed:

* The PRC is made up of Congressional appointees that act as a Board for the USPS as it relates to mailing rates and changes

* The USPS loses billions of dollars each year due to the fact that:

  • Getting concessions from the unions on work rules that would reduce costs is extremely difficult
  • When the USPS hires a veteran they absorb the veteran’s retirement benefits regardless of the branch of the armed services they retired from and the federal government is released from that obligation
    • Veterans get preferential treatment because of their service to our country (and rightly so) in the civil servant hiring process
    • Time served in any branch of the armed services goes towards your time as a USPS employee

    *Congress passed a law two years ago that the USPS could not raise rates in any single year higher than the Consumer Price Index.  The USPS was granted, however, the ability to plead an “exigent case” meaning that in extreme cases they could present their point of view to the PRC to get an exception to raise rates higher than the CPI.  The first test of this was this year.

    Even though I am on the Board of the DMA, I have no insider knowledge on this issue other than what is stated below.  However, my guess would be that the PRC denied the USPS requests to force the unions to work with them to reduce the operating loss and for Congress to help with the unfunded veteran pension liability that creates much of the multi-billion dollar operating loss each year.  Stay tuned, but if you are still in the mail either for marketing or shipping purposes, this is at least a win for today.  Here is the email from the DMA:

    DMA Praises PRC Rejection of Postal Rate Hikes as Job Saving Action

    The Postal Regulatory Commission (PRC) this morning unanimously denied the US Postal Service’s (USPS) request to enact “exigent” price increases in 2011. The PRC said the USPS failed to justify an average 5.6% rate increase.

    DMA praised the PRC’s decision, having led efforts on behalf its members to encourage the PRC to reject the USPS request for an unlawful and exorbitant rate increase.

    The requested rate hike would have increased postal rates by nearly ten times the rate of inflation, requiring customers to pay an additional $3 billion annually for postage despite the current rate of inflation remaining close to zero. The PRC decision requires the Postal Service to continue following the current law, which limits any postage increase to the rate of inflation.

    “Today’s decision is a great victory for businesses and consumers.  The US Mail will remain a viable and affordable communications channel.  The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment,” said Lawrence M. Kimmel, DMA’s CEO.  “This, however, is only a first step.  USPS customers must continue to work together – and with Congress – to help the Postal Service maintain competitiveness in the marketplace.”

    USPS must now make critical decisions to cut costs and right-size its network and workforce.  As it conducts negotiations with many of its employees, the Postal Service must not lose sight of the fact that its financial well-being – and that of its customers – depend on immediate and significant cost reductions.

    “DMA will work closely with Congress to correct the overfunding of postal pensions so that companies are not taxed to subsidize other government programs,” concluded Kimmel.  “We are fighting for reforms that will ensure a viable postal system able to meet the needs of consumers and the business community for generations to come.”

    To learn more, please read:

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    A Little More Background on the Colorado Sales Tax Issue

    Wednesday, July 28th, 2010

    Posted by John Healy, CEO of Dydacomp

    John Healy, Dydacomp CEOI thought I would share with you a very good summary of the Colorado Sales Tax reporting issue that you will unfortunately need to deal with in the very near future.  A summary of the most current thinking has been best captured by Monica Smith, CEO of Marketsmith, Inc.  Her company specializes in mail planning, database and analytical marketing services.  Take a look at her very thorough and brief take on the new law at: http://www.marketsmithinc.com/2010/07/update-on-colorado-salesuse-tax-legislation/

    Also, read our post on how to deal with this law from a reporting standpoint using M.O.M. at http://blog.dydacomp.com/new-sales-tax-law for more details.  We’ll also do our best to keep you curent on this law as the Direct Marketing Association among other groups is challenging Colorado’s authority as a state to implement this type of tax on out-of-state companies.

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    Why You Need to Watch for an Internet Sales Tax

    Friday, June 11th, 2010

    Posted by John Healy, Dydacomp CEO

    John Healy, Dydacomp CEOAs much as I like to talk to you about your business and how Dydacomp can help you be a world class multichannel merchant, there is something facing you that could negate all of the good work we are doing together.  I’d like to spend just a few minutes talking about what I am seeing as a Board Member of the Direct Marketing Association as opposed to the CEO of Dydacomp and how it will affect us all as it relates to what is going on with the current year and the mounting budget deficit.  I am no economist, just a business person like you, but I can already see what we are heading into.

    A couple of data points put things into perspective for me recently on the current financial situation for the United States Government and 46 of the 50 States…. The budget deficit is HUGE!  I’ll give you the numbers in a second, but the only way out of this mess is, of course, to spend less and tax more.  Both of those efforts will have a profound effect on your business in the next two years.

    So let’s start with the Federal Government.  Below is a chart that Morgan Stanley produced to show an e commerce audience (among others) that one of our biggest challenges for growth will be to stay clear of the Federal Government’s efforts to deal with the annual and accumulated budget deficit.  Take a look at what they showed us for fiscal year 2009 alone:

    America's Biggest Challenge

    Basically it shows that the US Government took in $2.105 trillion dollars in fiscal year 2009 and spent $3.518 trillion!  So to get things back in line it is apparent that the government will need to cut economic aid, for instance, to the individual states and entities like the United States Postal Service (USPS).  On the latter there is more news… the USPS has projected that if things don’t change they will lose, on average, roughly $24 billion a year for the next 10 years (Source).  On top of that  46 out of 50 states are currently showing a budget deficit that averages about 17% per state or roughly $112 billion dollars in total on their own (Source).  Here is a map showing which states have a budget deficit:

    State Budget Shortfalls

    So what does this mean to you?  Well, forget how much more in health insurance you will have to dole out as an employer or pay as an employee or that the USPS will file a new rate case in July where they will ask for an exception to raise prices above the cap provided by Congress just two years ago which currently is tied to the Consumer Price Index.

    I think the most profound effect and risk to your business is what I am seeing as an effort that has already started by individual states to apply a sales tax when you ship into their state whether the order is taken online or over the phone.  New York and Colorado are already on this.  This will add another 5 – 10% in cost to your customer which is just enough, I believe, to put a large number of orders at risk.

    My only suggestion to you is that you stay in touch with these issues and the best way to do that is probably joining the Internet Alliance which is part of the Direct Marketing Association.  They are working on this every day among other issues like privacy and data security.

    As more information becomes available on this subject I will post to our blog to share with you.  We will also ensure that Mail Order Manager and SiteLINK will perform for you so you will continue to be able to adhere to the different states’ approaches to collecting sales tax as well as be compliant with non Government regulatory entities like PCI.

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