Business
4:11 am
Tue May 7, 2013

Tile Business Owners: Web Sales Tax Would Be A 'Nightmare'

Originally published on Tue May 7, 2013 10:04 am

Transcript

DAVID GREENE, HOST:

Right now online you can buy virtually anything: shoes, books, jewelry, tools, and you pay no state sales taxes. Well, that might soon change.

STEVE INSKEEP, HOST:

Yesterday the Senate overwhelmingly approved the Marketplace Fairness Act. That bill gives states the power to enforce their sales tax laws on online retailers making more than $1 million per year.

GREENE: The bill now goes to the House, where it's expected to be challenged by critics who view it as a tax increase for small online retailers. Retailers like Villa Lagoon Tile, an online store based in Gulf Shores, Alabama.

INSKEEP: The company sells custom cement tile. Its total sale last year: $1.5 million.

GREENE: The two owners of the business are Lundy Wilder and Dave Perry. They're on the line. Good morning to you both.

LUNDY WILDER: Good morning.

DAVE PERRY: Good morning. Good morning.

GREENE: So could one of you tell me a little bit about your business and what kind of tiles I'm buying if I do some online shopping with you?

PERRY: Well, we sell custom cement tile and encaustic cement tile.

WILDER: This type of tile is known as Cuban tile. It was very popular in Barcelona, and Brazil and France about 100 years ago and it fell out of favor after linoleum and terrazzo became popular, but now there's a resurgence of interest because it's so easily customized and designers can do their own color schemes, their own patterns, these beautiful interlocking patterns.

GREENE: So I'm getting like an old European type field if I go this route.

WILDER: Exactly.

GREENE: Well, let's say this new law passes. What exactly would this require you to do?

PERRY: Well, it would have to keep track of every state that we sold tiles into and we'd have to know about all the sales taxes that they charge. So it would be more of an administrative nightmare for us than anything.

GREENE: And do you do some of this now? I mean keep track of which states you're selling to and so forth?

WILDER: We haven't really, because our sales tend to cluster around the Coast, Florida, Texas, California, Seattle, but we haven't ever really tracked it specifically. We do joke about certain states that, you know, we've never had a phone call from, you know, Nebraska, for instance, or something.

GREENE: Cuban tile is not big in Nebraska yet?

WILDER: No.

PERRY: Or Alabama.

WILDER: Or Alabama.

GREENE: Your own state.

(LAUGHTER)

WILDER: That's right.

PERRY: Indeed.

GREENE: It sounds like, you know, this would take administrative new responsibilities. And I know the law requires that they provide free software to deal with a lot of this record-keeping. Won't that help you out?

WILDER: That depends if our personnel are equipped to become users of that software.

PERRY: Yeah. We have one other employee, our bookkeeper. We do have CPAs for filing federal and state taxes. We'd probably be primarily using our bookkeeper to keep track of that information and passing it on to our CPA.

WILDER: I think it's going to be a tremendous burden to us. Our bookkeeper is very good at what she does, but she's not very really knowledgeable in other areas of computer usage, though. So that's going to be a steep learning curve. And the fact that the CPAs charge, you know, lawyer type rates, we try to do as much in-house as we can before we pass things off to them.

GREENE: It sounds to me like figuring out the specifics of this law are the part that is wearing you; it's not going to affect your sales.

WILDER: I think that we're going to possibly lose some residential sales over this. They tend to use our tiles in their foyers or in their bathrooms, occasionally on the patio - and sometimes the husband and wife aren't even in agreement about what the budget should be for that project.

(LAUGHTER)

GREENE: I know the feeling.

WILDER: And so the fact that the sales tax is going to increase the cost of this flooring, they may opt to go to something that's less expensive, like slate or machine made tile.

GREENE: Some of the lawmakers who support this law say that it really is a matter of fairness. Do they kind of have an argument there?

PERRY: Well, we are not against paying sales tax for it, but the complications that go along with doing such is going to be the biggest challenge for us.

WILDER: Yeah. I would much prefer a universal collection pot where all the sales tax money went into and then was dispersed by other people.

GREENE: Any worry about the survival of the business if this law goes through?

PERRY: I don't think it'll run us out of business but it certainly will, you know...

WILDER: Our prices they have to go up.

PERRY: Our prices they have to go up, you know, for the extra administrative...

WILDER: Overhead.

PERRY: ...costs were going to incur.

GREENE: Well, best of luck to you both and thanks so much for checking in with us.

WILDER: Thank you.

PERRY: Thank you.

GREENE: That's Dave Perry and Lundy Wilder, co-owners of Villa Lagoon Tile. It's a small business that would be subject the Marketplace Fairness Act.

(SOUNDBITE OF MUSIC)

GREENE: You're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.