Jul 12 - MRA Renews Calls for E-Fairness as Amazon Prepares to Open Second Michigan SubsidiaryLANSING, MI — As Amazon prepares to open a second subsidiary business in Michigan, small businesses across the state today renewed their calls for lawmakers in Lansing to close the Internet sales tax loophole that is threatening Michigan jobs and giving an unfair advantage to out-of-state, online-only mega-retailers.
“While we are excited that Amazon plans to increase its investment in Michigan by opening a second Michigan location, the time has come for them to start playing by the same rules as every other Michigan job maker,” said James P. Hallan, President and CEO of the Michigan Retailers Association. “While Amazon is talking about bringing a number of new jobs into Detroit, the time has come for Lansing to end the special treatment that gives them an artificial leg up against Michigan companies who already employ hundreds of thousands of workers.”
When consumers buy a product online, Michigan law says the consumer must pay the same sales tax he or she would if buying the product from a store in person. Under Michigan’s current sales tax collection system, however, out-of-state, online-only retailers are exploiting the massive legal loophole that allows them to forgo collecting sales tax at the point of sale. Online-only retailers use this loophole to attract shoppers away from brick-and-mortar businesses by using deceptively lower prices, since Michigan retailers must add — and collect — the 6-percent sales tax to the customer’s bill. As a result, Main Street businesses are put at a significant competitive disadvantage that puts Michigan’s business community at risk.
According to media reports and Amazon social media accounts, the out-of-state mega-retailer is preparing to open a new development center in Detroit. Amazon already has a physical presence in Michigan through Brilliance Audio, a wholly owned Amazon subsidiary located in Grand Haven, giving the state the ability to require the Internet seller to collect and remit the state sales tax.
While Michigan lags behind, to-date 25 other states have passed e-fairness legislation or reached an agreement with out-of-state retail giant Amazon.com to begin collecting their state’s sales tax.
Retailers from across Michigan formed the Michigan Alliance for Main Street Fairness, a coalition of hundreds of job makers calling for common-sense updates to Michigan’s tax system to ensure there is a level playing field for both small businesses and online-only retailers concerning the collection of sales taxes. More information about the coalition can be found at www.standwithmainstreet.com