Supreme Court considers future of online sales tax
As the U.S. Supreme Court evaluates whether online retailers should collect sales taxes, industry groups continue to urge the court to overturn the tax break adopted in the pre-Internet era.
On Tuesday, the court heard oral arguments on a 2016 South Dakota law that requires online merchants with more than $100,000 in sales to state residents, or 200 transactions with state residents, to collect sales tax. The law was struck down last year by South Dakota’s highest court, which cited the Supreme Court’s 1992 Quill Corp. v. North Dakota decision. In that case, the justices said online sellers can only be required to collect sales tax in states where they have a physical presence such as a store, office or warehouse. Part of their reasoning was that there were more than 6,000 state and local sales tax jurisdictions across the country and that the regulations were too complex for a seller to know how much to collect unless they were doing business locally.
The Hill reported that the justices seemed to grasping for answers on how to resolve the dispute, with no clear indication on how they will rule.
The nation’s retail associations are calling for a level playing field, “where everyone competes under the same rules,” said Matthew Shay, president and CEO of the National Retail Federation.
“It’s time for the Supreme Court to clear the way for modern sales tax policy that will finally put all channels of retail – from stores to online – on a level playing field where everyone competes under the same rules,” Shay said. “Online sellers who don’t have to collect sales tax have held an unfair price advantage over local retailers for far too long.”
The Retail Industry Leaders Association (RILA) said retailers are hopeful that the Court will acknowledge the dramatic changes in technology and commerce over the past 20 years. Reversing the decision could pave the way for states to require all retailers play by the same rules and collect sales taxes.
“Main Street retailers deserve a level playing field upon which to compete, and the case today before the U.S. Supreme Court may finally get us there,” said Brian Dodge, senior executive VP for public affairs with RILA.
Hockey retailer expands footprint
Pure Hockey, the largest hockey retailer in the U.S., is getting a bit bigger.
The company announced that it has acquired both of Bauer Hockey’s “Own The Moment” stores. With the acquisition, Pure Hockey will operate 53 retail locations under the Pure Hockey and HockeyGiant brands in 18 states, as well as three e-commerce sites focused on hockey and goalie equipment.
“As the leading hockey retailer in the U.S., we’re constantly striving to improve our shopping experience and connect with consumers in more meaningful ways,” said David Nectow, CEO, Pure Hockey. “Over the years, we’ve developed a very strong relationship with Bauer….and we’re excited to continue working with Bauer in our mission to bring great product and great shopping experiences to our customers.”
The acquired stores are located in Bloomington, Minn., and Burlington, Mass. They will operate under the “Bauer Hockey Experience” banner, and both will remain Bauer-exclusive locations.
Analysis: Bon-Ton Stores appears headed toward liquidation
With the only two suitors at the court-supervised auction being liquidators, it looks increasingly likely that Bon-Ton Stores will largely go out of business.
Some locations may survive, especially if the liquidators receive offers from property companies like Namdar Realty Group and Washington Prime Group. Both firms have been working with the troubled department store chain, purportedly to keep stores open across the malls they operate.
A bid for the full Bon-Ton business from real estate players was always unlikely. The rationale behind such a move was not to acquire a viable commercial entity but to stop the loss of a significant tenant. In our view, such a move is like swallowing poison in an attempt to cure a mild disease — something that is neither sensible not practicable.
In truth, if Bon-Ton was a viable entity then there would have been far more interest in the auction. However, it is a weak player in a weak part of the retail market. Moreover, its disparate retail fascia means that it does not have the power of significant national brand recognition than any potential acquirer could build on.
We believe that the likely path ahead is that assets will be cherry-picked during liquidation. The brand name might be acquired, especially for use online. There may be interest in a handful of better stores — although how these would work as stand-alone entities or as part of a much smaller group is open to debate.
As such, this more-or-less looks like the end of the road for Bon-Ton. As sad as this is for staff and anyone commercially affected, it is part of the necessary restructuring of retail. Bon-Ton’s sales will be picked up by more productive and successful players.
Bon-Ton’s place in retail history is secure. Unfortunately, the company did not evolve enough to win a place in retail’s future.