Price of collecting sales tax approaches $7 billion

Filed under: Retail |

The National Retail Federation welcomed a study showing that it costs retailers $6.8 billion annually to collect state and local sales taxes across the nation. The group says the study could help merchants in their long-sought goal of receiving appropriate compensation for the collection costs.

The study, conducted by the accounting firm PricewaterhouseCoopers LLP, found that retailers’ cost of collecting sales tax – from training personnel to filing paperwork – amounts to an average of 3.09 percent of the amount of tax collected, or $6.8 billion annually nationwide.

The cost hits hardest on small retailers, with those with annual sales of less than $1 million averaging 13.47 percent; those between $1 million and $10 million averaging 5.2 percent; and those of more than $10 million averaging 2.17 percent, according to the study.

For small and medium-size retailers, the largest components of the cost are preparation of tax returns and documentation of tax-exempt sales. For small retailers, staff training is the No. 3 component. For medium retailers, the credit and debit card fees attributable to sales tax are the third-highest component. For large retailers, credit/debit card fees are the largest component, followed by unrecovered sales tax paid because of bad debt and staff training.

The study was commissioned by the Joint Cost of Collection Study group, which is made up of NRF, some NRF member companies and other retailers, the Council on State Taxation, the Multistate Tax Commission, the Federation of Tax Administrators, the National Conference of State Legislatures and the Government Finance Officers Association.

JCCS operates under the auspices of the Streamlined Sales Tax Project, the organization that crafted the 2003 Streamlined Sales and Use Tax Agreement that is the basis of a voluntary system that makes it easier for states to require Internet sellers, mail-order merchants and other out-of-state retailers to collect sales tax on merchandise sold to their residents. Legislation is pending in Congress to make collection mandatory.

Only 18 states provide retailers with any compensation for the costs of collecting sales tax, and most cap compensation at figures set years ago, typically $100 or $200 per company per month regardless of size, sales volume or number of stores.

IFA helping veterans thrive in workplace

The International Franchise Association is helping veterans make money while making a difference.

The Veterans Transition Franchise Initiative, known as VetFran, is a program available for veterans who want to acquire franchised small businesses.

VetFran receives no government funding. It is a simple but effective concept, IFA President Matthew Shay said. To participate, companies must offer veterans a “best deal” financial incentive to buy one of their franchises.

Nearly 500 veterans in 45 states have taken advantage of the program. A list of participating companies is available on the association’s Web site, www.franchise.org, under “Franchising for Veterans.”

VetFran has been recognized by the U.S. Dept. of Veterans Affairs as a Support Sector Champion for expanding business opportunities for veterans.

According to the U.S. Small Business Administration, 22 percent of the nation’s veterans are either starting or buying a new business, or considering the possibilities.

Support your local hospitals by giving blood

The Promenade Shops at Briargate will host a Bonfils Blood Center mobile blood drive from noon to 4 p.m. April 20.

The blood mobile will be parked just north of Sharper Image. The first 25 donors will receive chocolate syringes courtesy of Rocky Mountain Chocolate Factory. All donors will receive a 20 percent discount J. Jill coupon and be entered to receive a $25 Promenade Shops at Briargate gift card.

Bonfils Blood Center supplies blood to more than 115 health care facilities and needs to collect 4,350 donations weekly to meet the demand of the community and to be prepared for unforeseen events.

To make an appointment or for more information, contact Bonfils Blood Center at (800) 750-4483, option 1.

U.S. chain store sales up, down before Mother’s Day

In April, U.S. chain store sales grew 6.6 percent on a year-over-year basis, according to International Council of Shopping Center’s index.

Drug stores, which sell a lot of Easter-related products, led the pack, with an average gain of 8.1 percent. Discounters increased their sales 7.4 percent, with Target’s sales rising 10.4 percent. Apparel stores boosted their sales 5.9 percent, with American Eagle Outfitters posting the highest gain at 19 percent. Department store sales grew 5.3 percent during the month.

U.S. chain store sales declined 0.4 percent the first week of May, according to ICSC’s index. The year-over-year growth rate was 3.1 percent for the period.

“With consumers typically waiting until the last minute to shop for Mother’s Day, the pace of consumer spending slipped a tad from the prior week,” said Michael P. Niemira, ICSC’s chief economist and director of research.

“For May, we expect monthly chain store sales will increase by 3 percent to 3.5 percent, on a year-over-year basis,” Niemira said.

Joan Johnson covers retail for the Colorado Springs Business Journal.