Consumer Internet spending reached $1.3 billion during Thanksgiving week, a 140-percent increase over 1999, according to a report issued last week by Goldman Sachs and PC Data in Reston, Va. But consumer spending at specialty stores and physical malls was down 6.9 percent from last year for the same period, based on a sample of stores, according to the International Council of Shopping Centers in New York.
Council research director John Konarski blamed the economy and longer selling season for the shortfall and said online sales -- which account for less than 1 percent of retail sales nationally, according to government figures -- are still having a minor impact. "But who knows where it is going," he said.
If online retailers have to collect sales taxes from all customers, it will not turn off customers, believes Albert Noyes, executive vice president of online retailer SmarterKids.com. "I don't think sales tax saavings are very evident for people online. In the end, they shop online for the value that the site can deliver and the efficiency," Noyes said.
The tax situation for SmarterKids may change next year. The Needham, Mass.-based company is merging with Earlychildhood.com in Monterey, Calif., which now collects taxes in 28 states, Noyes said.
The states involved in the Streamlined Sales Tax Project are also testing technologies in a pilot program with three vendors: Esalestax.com, in Englewood, Colo.; Taxware International, in Salem, Mass., and Pitney Bowes, in Stamford, Conn.
Connected to a store's retail systems, these service providers calculate taxes on the final bill, as well as remit taxes to the states. If a state conducts an audit, it will examine the tax vendors' systems, not the retailers'. The vendors are paid a percentage of taxes collected, freeing retailers from the administrative burden, said Charles Collins, director of the sales and use tax division at the North Carolina Department of Revenue, one of four states participating in the project, along with Kansas, Michigan, and Wisconsin.
The goal is to combine tax simplification with technology that eliminates tax-processing burdens for retailers, Collins said.
Collins said the states are also investigating the possibility of certifying legacy tax system software typically used by larger companies and freeing those companies from audits if their software meets certain standards.