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The Retail Advocate

The Retail EmployerOctober 2007

Local Issues

Candidates for Local Upcoming Elections—November 6th

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State Issues

Candidates for State Upcoming Elections—November 6th

Click here for Election Contributions by Candidate, courtesy of the Virginia Public Access Project.

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Federal Issues*

* © 2007. NRF Enterprises, Inc. used with permission.

NRF Asks Congress to Approve Sales Tax Legislation

NRF this week led nearly 100 retailers and trade associations in asking Congress to approve legislation making it easier to require Internet merchants, mail-order houses and other "remote sellers" to collect sales tax across state lines.

"The states and the business community have made great progress in simplifying state sales taxes," NRF and the other groups said in a letter to all 535 members of the House and Senate. "We call on Congress to respond to their efforts by passing this legislation."

"Brick-and-mortar retailers are required to collect state and local sales taxes while many on-line and catalog retailers are not," the letter said. "Consumers, however, legally owe these taxes even when they are not collected by the retailer. This uneven and complex system imposes substantial costs on retailers and consumers and costs states and localities billions in lost revenue. This threatens vital public services including health care, education and public safety."

The letter was signed by 91 members of the Sales Tax Simplification Coalition, which includes individual retailers along with NRF, a number of state retail trade associations and other associations representing retail segments such as book stores, convenience stores, college stores and shopping centers.

Coalition members are hoping to see action this fall on the Sales Tax Fairness and Simplification Act, which is pending in both the House and Senate. The measure would allow states that have implemented the Streamlined Sales and Use Tax Agreement to require that out-of-state merchants collect sales tax on merchandise sold to residents of their states. Retailers would be compensated for the cost of sales tax collection, and collection could be outsourced to certified service providers. Retailers with less than $5 million in annual gross remote sales would be exempt.

The Streamlined Sales and Use Tax Agreement, which simplifies sales tax law and creates a mechanism for collection and distribution across state lines, was developed in 2002 in response to a 1992 U.S. Supreme Court ruling that said remote sellers could only be required to collect sales tax from customers in states where they have a physical presence. With more than 7,600 state and local jurisdictions collecting sales tax -- many with different rates, different lists of taxable items and different definitions -- the court held that out-of-state merchants could not be expected to know what to collect.

The agreement went into effect on a voluntary basis in 2005 but passage of federal legislation is needed before sales tax collection can become mandatory. This week's letter noted that 22 states have passed legislation implementing the agreement. In addition, more than 1,000 companies have participated in the agreement voluntarily and have collected more than $125 million in state and local sales tax that would otherwise have gone unpaid.

The federal legislation received a boost this week when Senate Commerce, Science and Transportation Committee Chairman Daniel Inouye, D-Hawaii, agreed to co-sponsor the Senate bill, S. 34, which was introduced by Senator Mike Enzi, R-Wyo., in May. The House bill, H.R. 3396, was introduced by Representative William Delahunt, D-Mass., in August, and is co-sponsored by House Financial Services Committee Ranking Member Spencer Bachus, R-Ala., and Representative Ray LaHood, R-Ill.

NRF helped draft the Streamlined Sales and Use Tax Agreement, and has long argued that remote sellers enjoy an unfair price advantage in situations where they are not required to collect sales tax. NRF supports a level playing field where all retailers are subject to the same tax rules where their merchandise is sold from a store, through a catalog or over the Internet.

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NRF Urges FTC Not to Restrict Social Security Numbers

NRF is telling the Federal Trade Commission that Social Security numbers should be carefully safeguarded, but that their use as a means of identification is essential to modern business operations and should not be banned.

"Among our membership, the use of Social Security numbers is a very important part of day-to-day operations," NRF said. "Retailers recognize the importance of protecting this data from misuse by securing documents and data that might contain this sensitive information."

"Having established these numbers and encouraged their widespread adoption and use, the government should be careful not to throw the baby out with the bathwater," NRF said. "While some privacy advocates may be happy to eliminate the common use of the Social Security number, it would surely be replaced by some other tool or identifier because it would have to be. Those same advocates would be just as unhappy with the use of a replacement Social Security number as they are with today's practices."

"Unfortunately, we no longer live in a small town society, and individuals in today's more mobile world can only be accurately identified by their personally identifiable information," NRF said. "The most unique and most universally accepted of all personally identifiable information is the Social Security number. The challenge then is to protect sensitive personally identifiable information and put practices into effect that will help cut down on data misuse and fraud. Ironically, one of the best ways to protect consumers is to authenticate their identity using data -- and again we come back to the basic utility of the Social Security number. It is simply a lynchpin in the information economy."

NRF's comments came in a September 5 letter to the Federal Trade Commission in response to a request for public comments from the agency's Identity Theft Task Force.

NRF outlined more than a dozen ways in which Social Security numbers are used in legitimate business operations involving both employees and customers, including many where the use of a Social Security number is required by federal law. Social Security numbers are used in hiring employees, administering employee benefits such as health insurance and pensions, doing business with contractors, and submitting tax information to the IRS, for example. Social Security numbers are also used to prevent fraud, in retail loss prevention, for life insurance, workers' compensation insurance, and to track retirees. In the latest use, the Department of Homeland Security has issued a regulation intended to crack down on illegal immigrants by giving employers 90 days to fire workers if names and Social Security numbers given on job applications do not match.

Social Security numbers are essential for identifying customers who apply for credit, both to ensure that applicants are linked to the proper credit history and to stop identity theft in the case of fraudulent applications, NRF said. The numbers are also used to help customers apply for Medicare or Medicaid claims for reimbursement for medical products, to report tax information to the Internal Revenue Service for customers who have won a contest, and other purposes.

The House Ways and Means Committee in July approved legislation that would restrict the use of Social Security numbers despite warnings from NRF and other business groups that it would interfere with legitimate business uses of the numbers. The bill, H.R. 3046, the Social Security Number Privacy and Identity Theft Protection Act of 2007, would prohibit businesses from selling or purchasing Social Security numbers except in limited cases such as tax purposes, credit reporting under the Fair Credit Reporting Act or ensuring the accuracy of insurance information. Violators would face fines of up to $250,000 and prison terms up to five years.

The measure is sponsored by Representative Michael McNulty, D-N.Y., who says it provides exemptions for legitimate businesses uses, but NRF is concerned the bill is too broadly written. The measure has yet to see action on the House floor.

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Minnesota smoking ban goes into effect

Minnesota today joins 17 other states by banning smoking in all workplaces and indoor public places, including bars and restaurants. The state's legislature passed the "Freedom to Breathe Act" last spring. Although the ban won't stop restaurant diner Lee Lubinski from his weekly pizza trip, he disapproves of the law, saying, "Here again, it's Big Brother telling what you can't do." Winona (Minn.) Daily News

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Shop.org Seeks Extension of Internet Tax Freedom Act

NRF's Shop.org division this week urged the Senate to pass legislation extending a ban on Internet access taxes that is set to expire in just over a month, but a vote was delayed as lawmakers continued to debate how long the extension should last.

"Extending the Internet tax moratorium will broaden the reach of technology and help eliminate what remains of the ‘digital divide,' " Shop.org Executive Director Scott Silverman said Wednesday in a letter to members of the Senate Commerce, Science and Transportation Committee. "The moratorium helps to ensure that all Americans have affordable access to the Internet and can connect with those businesses that can best serve their needs."

With on-line retail sales projected at $259 billion this year and growing at a rate of 25 percent per year, "clearly, e-commerce has flourished" in the absence of Internet access taxes, Silverman said.

Shop.org, which represents on-line retailers, asked for a permanent extension of the Internet Tax Freedom Act, which has banned Internet access taxes and "multiple and discriminatory" Internet taxes since 1998. The measure, which does not involve the collection of sales taxes on Internet purchases, has seen two temporary extensions since it was first enacted but is currently set to expire on November 1.

The Commerce, Science and Transportation Committee was scheduled to vote Thursday afternoon on legislation that would extend the ban for four years. S. 1453, the Internet Tax Freedom Extension Act of 2007, sponsored by committee member Senator Tom Carper, D-Del., would grandfather Internet access taxes that already exist in a few states, and clarify that the ban does not apply to services such as television programming that may be bundled with Internet service.

But Commerce Secretary Carlos Gutierrez, Treasury Secretary Henry Paulson Sr., Senate Minority Leader Mitch McConnell, R-Ky., Senator John McCain, R-Ariz., and others have pushed for a permanent extension of the ban. Supporters of permanent extension have focused on S. 156, sponsored by Senator Ron Wyden, D-Ore., and House companion bill H.R. 743, sponsored by Representative Anna Eshoo, D-Calif.

Following last-minute negotiations, committee Chairman Daniel Inouye, D-Hawaii, delayed Thursday's vote, saying Democrats on the two sides had agreed to a six-year extension. Republicans, however, had not signed on, and "further discussions" were needed before the committee could vote, he said. Inouye said he remained opposed to a permanent extension because "we don't know what the future holds."

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NRF calls for procedural changes to protect data

The NRF has asked credit card security officials to alter procedures under which they store certain data, asserting that current methods cause many of the vulnerabilities that lead to data theft and fraud. "The bottom line is that it makes more sense for credit card companies to protect their data from thieves by keeping it in a relatively few secure locations than to expect millions of merchants scattered across the nation to lock up their data for them," wrote David Hogan, NRF's chief information officer. StorefrontBacktalk

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Commentary: E-retailers must stay on their toes through holiday season

Many e-commerce companies will do more business in the 12 days before Christmas than during the entire rest of the year, writes Corey Leibow, president and CEO of Mercado Software. Analyzing the previous year's search results and being ready to execute midseason changes in site search and merchandising can mean the difference between happy holidays and December doldrums, he writes. E-Commerce Times

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NRF to credit-card companies: Stop forcing retailers to store credit-card data

Citing concern over data breaches, NRF, in a letter to Payment Card Industry Security Standards Council, requested changes in how the credit-card industry requires merchants to store credit-card data. Read more here.

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Illegal workers remain hopeful law will side with them

The government's plan to crack down on illegal immigrants apparently has not stopped people from sneaking into the U.S. for jobs, according to The Mercury News. One immigrant said the plan—delayed by a lawsuit from taking effect—may be a boon for workers seeking citizenship if they already are in the country. San Jose Mercury News

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