Best Buy Praises New Laws that Tax Online Retailers

The Richfield-based company says that brick-and-mortar stores are at a competitive disadvantage when online retailers aren't required to collect sales tax; it supports new laws like one in California that is designed to level the playing field.

Best Buy Company, Inc., on Tuesday announced its support of a new “e-fairness” law in California, which requires online retailers with a presence in the state to collect sales tax on purchases made by the state's residents.

California Governor Jerry Brown announced on June 29 the signing of the bill, and it went into effect immediately. Online retailers are now required to collect sales tax if they use affiliate sellers or have substantial ownership of subsidiary companies or operations in the state. The tax is already collected by traditional brick-and-mortar retailers, some of which have argued that they were put at a disadvantage.

Most states require residents to self-report online purchases in their annual tax filings and pay state taxes on them, but many people aren't aware of the requirement and few actually do report purchases and pay what's owed-so online retailers' prices can seem more attractive to consumers wanting to save money.

“[Best Buy] believes a competitive disadvantage exists for brick-and-mortar retailers in the state of California due to the sales tax discrepancy and supports Governor Brown's recent enactment of e-fairness,” the Richfield-based company said in a statement.

Amazon is reportedly already fighting back against the new California law. According to a recent report by American Public Media, the company is pushing a ballot referendum that would let Californians decide whether they want to be taxed.

Similar “e-fairness” legislation has been introduced in many states, including Minnesota. The bill in Minnesota-which didn't pass in the most recent legislative session-sought to require all online merchants that promote their products through local Web sites or businesses to collect state sales tax on purchases made by Minnesota residents.

“We support the Minnesota e-fairness legislation and are hopeful the provision will be passed in a special session,” Best Buy spokeswoman Lisa Hawks wrote in a Wednesday e-mail to Twin Cities Business.

Brian Steinhoff, president of the Minnesota Retailers Association, recently told Twin Cities Business that many of his more than 1,500 members are losing money because of the current system.

In March, a representative of Performance Marketing Association, Inc.-a trade association that represents the interests of the performance marketing industry-told Twin Cities Business that the Minnesota bill, which was under consideration at the time, would put a large and unfair burden on out-of-state retailers and could cause them to stop buying ads on Minnesota Web sites.

North Carolina and Rhode Island previously passed laws that require out-of-state retailers to pay taxes on purchases that residents make through state affiliates, and Best Buy also praised the passing of similar legislation in Illinois.

Best Buy is Minnesota's third-largest public company based on revenue from its 2010 fiscal year, which totaled $49.7 billion. The company reported $50.3 billion in revenue for its most recently completed fiscal year.