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Utah bloggers say online sales tax bill threatens their livelihood

CAPITOL HILL – A bill on Capitol Hill is pitting lawmakers against bloggers. House Bill 235 would require online retailers to start charging sales tax on purchases going to Utah.

That means merchants like Amazon, who partner with bloggers in Utah, would be classified as a Utah business, even though they do not have a physical retail presence in the state.

Angel Peterson is one of 10,000 bloggers in Utah.

She blogs about her passion, sewing, on fleecefun.com. The mother of three has turned her hobby into profits.

“This last year, I earned what I would have earned doing a full-time job,” Peterson said.

She says the proposal puts her livelihood in jeopardy.

“They're basically saying that I am now a representative of the company,” Peterson said.

She worries merchants will leave, and bloggers will lose out.

“I understand what they're trying to do with these big companies, but, unfortunately, they're not sticking it to the big companies, they're sticking it to the moms,” Peterson said

Blogger Natalie Martins also spoke about the bill.

“It's emotional for me because I've been through this before,” she said.

Martins runs the blog Two Wheeling Tots, where she writes bike reviews for parents.

The stay at home mom left California after the state passed a similar law. Now, she may have to pack up again if the bill passes.

“I know several bloggers who, and we may be in the position, are going to sell our houses and move,” Martins said.

Angel and Natalie understand the need for lawmakers to create a level playing field for online retailers and brick and mortars, but say they’re caught in the cross hairs.

“Amazon leaves, and then bloggers lose income, which means we won't be paying our state tax as high because we've lost income,” Peterson said.

17 comments

  • Daniel Gray

    I guess your reporter missed the new law that was signed into effect that BANS ANY state from taking sales tax on internet purchases UNLESS the store has an office or warehouse in that state. And NO they CANNOT say that a blogger or a person selling something that you can get on the net is a rep of that company.

    States just got bytch smacked and there is nothing they can do about it.

    • Joel

      A few of our representatives noted that the law was unconstitutional, as states are not allowed to regulate interstate commerce. But they were drowned out by the other reps who said they wanted to “send Washington a message.”

      I wondered if the message was how to ruin 10,000 of your citizen’s livelihoods, instead of, you know, sending a letter. Anyone got an extra postage stamp?

    • R David L Campbell

      The law that was just passed was regarding sales tax on Internet access, not Internet purchases. You are conflating that with the 1967 Supreme Court ruling that said retailers must have physical presence in a state for them to be compelled to collect the sales tax due. A lot has changed since 1967 – and most online retailers can tell you in a few milliseconds now how much your shipping cost will be to any point on the globe, there is no reason those same technologies cannot be harnessed to determine he sales tax due.

      If you don’t like sales tax, go to your legislature and get it repealed. But so long as it is the law in your state, all retailers should be held to the same standard of collection.

      • Joel

        I’m referring to the more recent Quill v. North Dakota, where the Supreme Court found it unconstitutional for states to attempt to regulate interstate commerce.

        It’s not about taxes — everyone is supposed to pay their’s. It’s about a ham-fisted, ill-conceived attempt to punish Utahns who work online, in order to send a message to Washington (note the concurrent legislation asking Congress to act on the issue nation-wide).

  • Amy

    It’s too bad these stay-at-home moms might actually have to put some pants on in the morning (as opposed to staying in their PJ’s) and go to work each day like the rest of us. Being a working mom stinks sometimes but you do what you gotta do.

    • Kelsey Sorenson

      Why shouldn’t a mom be successful and build her own business and make a full time income from home? Most of us bloggers put in FULL TIME work and no, we don’t stay in our PJs all day. That is fine that you leave and go to work in the morning, good for you! Many of us have found something that works for us and let’s us stay with our kids more. It’s whatever works for your family. Please stop the mommy wars!

      I haven’t done much affiliate marketing because I sell my own products. But this will be devastating for many moms I know. Most people don’t even understand affiliate marketing. This is how it works. Companies, such as Amazon, let bloggers sign up as affiliates. Affiliates can add links on their website to products they recommend, and they earn a *small* commission for each sale. This is how bloggers are able to give so much valuable information for FREE for you to enjoy, such as recipes and more. People put hours and hours of work into their blogs, so this is how they monetize their hard work while others can still enjoy the benefits. Also, income taxes ARE paid by bloggers! We pay taxes on any money we make. There are more than 10,000 of us in Utah and most rely heavily on affiliates. This will cut the income of 10,000 families in Utah. Not good for the economy!

    • Nate

      You realize that most of the code written to make the Internet work was written by people from home, right? If you don’t agree with people working from home, then you should really stop using the Internet.

    • ANOTHERBOB

      Ever stop to think that children are happier and safer with their stay-at-home moms than they are in some Drop-a-Tot facility? You sound jealous Amy.

    • Alison Moore Smith

      Amy, I suggest to you that forgoing ready-made employment offered by someone else and, rather, creating your own business might include more pants-wearing than your chosen alternative. I understand if you can’t/won’t learn to earn money while also caring for your own children, but to denigrate those who do shows a great deal of ignorance.

      I’ll be happy to compare hours worked, skill sets learned, value provided with you, if you’d like.

  • R David L Campbell

    Question 1: How is your legislature the “bad guy” in this discussion? Your legislature wants Amazon to collect the sales tax legally owed by Utah residents – you voted for these sales taxes to fund your local priorities, and Amazon is the one ignoring your will (as both a voter, and a consumer).

    Question 2: Has Amazon sent notice of terminating thier affiliates program in Utah? They very well might (if past behavior is any indication), but as of right now they have not (to the best of my knowledge).

    My point is this: Your Utah Legislature is following your will, and even working to lower taxes for Utahns when online retailers begin collecting just like every other Utah business. Without action by the Utah legislature, AND the Utah delegation in Congress, the current state of affairs favors out-of-state retailers over local businesses and bloggers like the author of this article.

    • Joel

      No one is villifying the legislature, although they certainly had some harsh words for online workers during the hearing.

      Amazon specifically prevents websites where owners reside in “nexus” states from participating in affiliate programs. Other affiliate companies have historically followed suit (including Overstock.com, CrayolaStore, GUINNESS, Hammacher Schlemmer, Oriental Trading Company, GiftBaskets.com, etc.)

      Of course, where these companies have a legitimate physical presence in a state, whether or not its has nexus status, they happily collect sales tax (e.g., New York, after Amazon offered next/same day delivery in NYC). But a blogger with an advertisement on their site doesn’t establish a physical presence, by any reasonable logic. And Utah doesn’t offer the market that NYC does, so they have no need to establish a physical presence here. So kicking out Utah’s 10,000 bloggers is, for them, an easy solution and incredibly harsh for Utah bloggers (Fun fact: A third of women bloggers, worldwide, live in Utah).

      Finally, studies show that people shop online due to convenience, product availability, and time savings. Cost (as from paying no sales taxes) doesn’t even show up on respondents reasoning. People are finding retail stores less convenient, and they should try to compete on those terms, rather than on price — including via misguided legislation — which studies show is a red herring.

  • N Stone

    I think the state is to blame that people aren’t paying taxes for Internet purchases. If you claim $100 of Internet purchases on the tax return, you are taxed 100% on that $100 instead of .0725% or whatever the local rate is on $100. How is that fair? I claimed it but I was like, “This is just wrong. Can’t some one fix that?” And the delivery companies who drop off the purchases pay employees and gas tax to the state for their operations. The legislature acts as if they are not getting any money at all which isn’t true.

  • Alison Moore Smith

    The report fails to mention probably the most important point: there is a precedent already set. When a state passes such laws, the companies simply disallow bloggers from those states to act as affiliates. The income is completely lost to Utah, both as taxable income and as economic stimulus through purchasing power.

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