Mailers Look to Sidestep Sales Tax on Postage

Share this article:
WASHINGTON -- Mailing associations want the U.S. Postal Service to make it easier for business mailers to pay the agency directly when working with a mailing services provider in an effort to save mailers from having to pay sales tax on postage.


"The answer to fix this problem of tax on postage lies with the United States Postal Service," Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, said in an association presentation at last week's quarterly Mailers Technical Advisory Committee meeting. "It is time for you guys to look at this and get rid of this."


The DMA is not the only group concerned. The Mailing & Fulfillment Service Association and the Mailers Council are working with the USPS on it. However, USPS spokesman said, "We continue to work with the mailers on this issue, but it is not an easy issue to resolve."


The Streamlined Sales and Use Tax Agreement, which took effect Oct. 1, lets remote sellers selling to people or businesses in member states voluntarily collect taxes on sales that occur over the Internet, telephone or by mail order. Presently, 19 states are members.


The agreement also contains a provision requiring mailing services providers to charge customers sales tax on the combined total of fees and postage. However, to get around the provision, mailing services providers can ask their customers to pay the USPS directly for postage.


"If [the mailing services provider] pays the postage and then bills me, I can be taxed greater than 6 percent, larger than the increase we had on postage in January," Cerasale said. To combat this, "we can go to every state and try to fight this and spend a heck of a lot of money, or have the postal service figure out a way to allow mailers to pay them directly."


Cerasale said Periodicals mailers pay their postage directly to the USPS, and "we need to figure out a way for everybody to do this."


The DMA also objects to two congressional bills introduced late last year that would mandate provisions of the SSUTA. The bills were referred to the Senate Finance Committee.


"We keep pushing," he said. "You can't collect taxes unless there is nexus there."


Cerasale also ripped the latest report from two University of Tennessee professors who found that $15 billion in Internet and remote sales taxes are uncollected nationwide.


"That's garbage," he said. "All the business-to-business taxes are collected. [Also], think of Lands' End, think of L.L. Bean in the New York and the Washington, DC, area collecting the taxes. This is just a garbage number trying to create a scare."


On another issue, Cerasale took the USPS to task for how it handles its manifesting. The transportation of goods is how the consumer-driven economy runs, and it is basically run on computer manifests and relatively easy paperwork, he said.


"Why not the mail?" he asked. "Why these outrageously long, complicated forms? Why not make it simple. KISS -- keep it simple, stupid. It's time to get postage payments really simple, and you should be working on that right now."


Manifesting is more complicated for the USPS than for its competitors because it handles many different kinds of mail, Nicholas F. Barranca, USPS vice president of product development, said at a luncheon after the conference.


Barranca said that the agency is working on the manifesting issue. For example, it is improving its Centralized Account Processing System and migrating it into the PostalOne system, a Web-based alternative to existing manual mailing processes with an electronic suite of services designed for business mailers.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


This material may not be published, broadcast, rewritten or redistributed in any form without prior authorization. Your use of this website constitutes acceptance of Haymarket Media's Privacy Policy and Terms & Conditions