Postal Rates and Internet Sales Tax Present Perfect Storm of Marketing Woes

This week I’m turning the blog over to some old friends at the ACMA. For anyone who uses direct mail, there’s a good chance postage will be going up dramatically soon. Whether you’re aware of that or not, this week’s post will bring you up to speed on the issues and how you can get involved in protecting your postage rates.

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Beyond the SCOTUS case in South Dakota, the ACMA has sued several rogue states seeking to sidestep the Quill precedent. (SCOTUS’s ruling in the Quill decision upheld a 1967 ruling in National Bellas Hess v. Department of Revenue of Illinois.) Through our True Simplification of Taxation (TruST) coalition, in concert with NetChoice, the Data & Marketing Association and Electronic Retailing Association, we’ve fended off several bills that would have submarined the catalog and e-commerce sectors as of 2013. That year, the Marketplace Fairness Act passed out of the Senate by an overwhelming 69-27 vote. At the time, we were urged to give up any hope of maintaining the Quill precedent. Yet, against all odds, we’ve “won” at every juncture since. Ultimately this issue will be resolved in Congress, but we need more companies working with elected officials if we are to prevail in the end.

Beyond the anticipated SCOTUS decision, Congressional action is required to ultimately resolve the issue including when, or if, remote sellers must collect and remit sales taxes, or be required to do something else, such as report on customer purchases as is currently the case in Colorado and several other states.

If the High Court overturns Quill, direct marketers and e-commerce merchants across the land will have to deal with more than 12,000 separate taxing jurisdictions both prospectively, and if states/municipalities choose, retroactively from the beginning of time. This leaves open many questions:

  • What are the bounds of regulation acceptable on companies without political connections or a physical presence in a state?
  • What level of sales tax compliance complexity is acceptable for remote marketers?
  • What past liability will be foisted on marketers?
  • How many audits can be imposed?
  • Without access to more neutral Federal courts, how much “objectivity” might marketers expect from local Tax Tribunals and Sales Tax Administrators in overturning their own punishing new demands, or even how responsive can out of state companies expect local officials to be in responding to them on intricacies of their varying laws, rates, definitions, sales tax holidays and remission requirements?

The Supreme Court’s abandonment of the Quill standard would portend chaos for nearly every business across the land as local authorities use their newfound power to regulate and tax companies well outside their physical jurisdictions.

A Call to Action & How You Can Help Your Cause

As both postal and sales tax issues move toward some eventual resolution soon, the questions are how painful the outcome will ultimately be and how long will it take. Both can be influenced by direct marketers, catalogers, publishers, online retailers and their suppliers — but only with steady attention, participation in the process, and a consistent message.

To be a successful lobby in Washington requires experts, researchers and highly knowledgeable outside consultants to support our policy objectives through the legislative, regulatory or agency processes. The ACMA is working both of these “perfect storms” hard. In some cases, we partner with other organizations. Companies can take on these battles on their own, but would be wiser to get involved with one or more of the associations in Washington.

It takes your attention and some money, but without either, our industry could be sunk.

Hamilton Davison and Paul Miller are, respectively, the president & executive director and vice president & deputy director of the American Catalog Mailers Association. Founded in 2007, the American Catalog Mailers Association is the only organization that advocates on behalf of the interests of catalogers and other remote sellers, and their suppliers. For more information, contact Paul Miller at pmiller@catalogmailers.org or 800-509-9814.

Author: Thorin McGee

Thorin McGee is editor-in-chief and content director of Target Marketing and oversees editorial direction and product development for the magazine, website and other channels.

3 thoughts on “Postal Rates and Internet Sales Tax Present Perfect Storm of Marketing Woes”

  1. In 2006 the very idea of a “postal service” was set on its head. Of course, ever since the first mail went out on horseback, postal rates were subsidized by taxpayers for the common good. Do I really have to tell you what that “common good” was? Well it’s gone now, a victim of other Trojan Horse concepts that actually seek to privatize your experience as a citizen (like charter schools, or privately financed toll roads as other examples). The industry failed to speak up in ’06. I doubt very little can be done in the current political climate, which is, to put it mildly, “toxic.”

  2. Maybe you didn’t mean to come off so harsh, but comments like that are unnecessarily biting – there are more professional ways to disagree. Regarding the post office, this article addresses the IMPACT of postage increases on the direct mail business; I didn’t read it as a commentary on the history and political underpinnings of the USPS. Regardless of the reasons behind the potential hikes, if they come down this swift and hard it will discourage companies from direct mail which will put many direct mail marketers out of business. This will have the opposite intended impact of increasing postage. Direct mail is already the most expensive form of mass marketing; the USPS needs to figure out how to LEAN UP more efficiently instead of expect the law of supply and demand to magically not apply. They are not “hemorrhaging money” because of low postage rates, it’s because they can’t run an efficient operation.

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