How the online sales tax bill would affect St. Louis-area pet store, men's underwear shop

A number of St. Louis area retailers insist they do.

That’s why Teresa Miller, owner of Chesterfield-based Treats Unleashed, suspects that her baked dog treats have a bigger online audience outside of Missouri than within the state: She doesn’t have to add taxes to most interstate sales.

“Local taxes in St. Louis are going up and up,” she said, noting that it’s nearly 9.5 percent at her Ladue shop. “So it’s putting us at a disadvantage” locally when compared to online competitors from other states.

When you’re buying a $50 bag of dog food every month, that 9 percent to 10 percent makes a difference, she added.

And it’s why Mike Russina, who runs mensunderwearstore.com, thinks his products have found such a large audience in New York and Texas, where one of his biggest competitors has to charge sales tax because it has operations in those states — but he does not.

“But we don’t have as much business in Missouri as I believe we should and it has a lot to do with sales tax,” he said, adding that he charges 10.46 percent sales tax on items that he ships from his brick-and-mortar shop, Boxers on Washington Avenue in downtown St. Louis.

So it’s a mixed bag for these two local retailers who sell their goods online. They have a step up on some other retailers in other states, but can be at a disadvantage in-state.

A lot of that extra leverage — both positive and negative — would start to melt away if Congress passes the Marketplace Fairness Act, which would allow states to collect sales taxes on online purchases. Right now, an online retailer only has to collect sales tax if it has physical operations in that state, such as a store or warehouse.

The legislation took a big step forward earlier this week when the Senate passed it by a vote of 69 to 27. But it is expected to face a steeper battle in the House where anti-tax advocates are working to derail it.

Miller is for it. She even went out to Washington a few weeks ago to advocate on its behalf at a news conference.

But Russina is a bit more mixed. He’d rather not have to charge taxes online, but since he feels it’s inevitable, he’d rather it be implemented more consistently across the board through a federal law than having each state come up with its own system.

First, let’s start with Miller’s point of view. She has five stores in the metro area. She started a small online store about five years ago, but now is about to launch a bigger web store through which she hopes to grow her dog and cat food sales.

For now, she falls under the $1 million in online sales exemption of the proposed law, so she wouldn’t have to collect sales tax on out-of-state purchases. But she says that doesn’t stop her from wanting to hit and surpass that $1 million mark one day.

Once she does, she realizes she may lose some of her out-of-state customers, but she said she hopes it would even out with a boost in more online in-state purchases.

While she doesn’t usually like government intervention in her business, she said this is one area in which she welcomes it. Like Russina, she wants a consistent policy across the states.

As for the often-repeated concern about how much extra time and costs this new law will mean for retailers who will have to start remitting taxes to every state, she thinks that is overblown.

“We don’t have a full-time accountant and we wouldn’t have to hire one,” she said.

But that is one of Russina’s main concerns. He does more than $1 million in online sales, so he would have to collect the sales tax in other states.

He wonders if this software from the states will be able to be easily plugged into the shopping cart solution he uses for online purchases or if he will have to pay for some additional software to sync it. And it would take more time for his accountant to wade through how much to send to every state and to cut checks to all of them, he said.

“Especially in these trying times, we have to watch every single penny,” Russina said.

On top of that, he would lose some of the competitive advantage he has right now in other states.

But on the upside, he said, the legislation, if passed, will hopefully give small businesses more of a fighting chance against the likes of Amazon.