Drury’s Furniture co-owner Mike Drury was recently named Minnesota Retailers Association Advocate of the Year. He accepted the award October 9, but even amid the accolades, his focus remains on the work that was done and why it was needed. The award comes after two decades pushing for sales tax fairness for retailers, specifically as it relates to purchases made via mail order or online.
The issue stretches back to 1967, long before the internet was at the tip of our fingers, but a time when mail orders were commonplace. That year, the Supreme Court decided the fate of Illinois versus National Bellas Hess, a lawsuit brought by the state against a Missouri retailer collecting no use tax for mail orders. “I get it; Bellas Hess was trying to protect an advantage they had,” says Drury. “My issue with this is it’s just unfair.”
Drury began lodging complaints with lobbying groups in the mid 1980s. At the time, companies were finding customers via what are dubbed, “shelter magazines.” These were focused on interior design or architecture, gardening, and housewares and home furnishings. Drury says people were finding small ads in the back of the magazines with a luring offer to pay no taxes for the goods. Brick and mortar companies in the state began complaining to the Commissioner of Revenue.
“It was a risky venture of ordering from a furniture place 1,000 miles away, so customers would get a price from that retailer and ask us to meet the price. We couldn’t do that,” explains Drury.
Twenty-five years after the Bellas Hess decision, riding the wave of the new, highly accessible internet sales, another lawsuit was brought before the Supreme Court in the case of Quill Corp. versus North Dakota. The state attempted to force the Delaware retailer to pay sales tax for its products. The court ultimately ruled states could not collect sales tax for online purchases. The only exception was if the seller had some sort of physical presence in the state in question.
“The estimated tax money the state missing out on is enormous and it was getting worse,” stresses Drury. “I had no idea it took this kind of thing to change it.”
The lobbying by retailers continued to grow following the decision. Some of the others lobbying for a change were public relations representatives from larger corporations, such as Target and Best Buy. “There was as much interest for a small business, like ours, as there was for other big companies. We were all saying the same thing,” says Drury.
Drury was asked to testify before both the House Tax Committee and the Senate Tax Committee, eventually testifying several times. “There’s sales and use tax and consumers really should have reported it, but no one did. I met three different commissioners of revenue. They could see how much money was not being collected that customers really did still owe. No one wanted this more,” notes Drury.
“Every time I was asked to testify, someone from Amazon pushing against it. They eventually did start charging sales tax a year or two ago,” he adds.
According to data from the National Conference of State Legislatures, a 2009 study was expanded in 2012 and quantified uncollected sales and use taxes totaled more than $23 million annually. This was projected to increase to $26 billion by 2015.
Amid several “kill Quill” bills, the state of North Dakota altered its laws in 2016 and three remote retailers refused to comply with payment of taxes. In 2017, the state took its fight to the Supreme Court. This past June, the court ruled 5:4 that the Quill Decision was “unsound and incorrect,” thereby overturning the earlier decision, as well as remaining portions of the Bellas Hess ruling.
“It literally took an act of Congress and a Supreme Court decision to overturn two previous decisions to make this happen,” says Drury. “People would tell me, ‘You can’t because of the Quill Decision,’ but that’s just wrong. Things can change. Things do change.”
Drury says he was stunned when he heard the Supreme Court had overturned the previous decisions. “I heard it on the radio,” Drury recalls. “It had been quite a while and it was out of our hands. Minnesota had already changed our state laws so our state could collect tax if the decision was changed.”
To date, there’s been no pushback from retailers, as far as Drury knows. “The initial argument was that small retailers would be inconvenienced. That was not accurate. It was the same questions from everyone. It’s like a different generational challenge with each case.”
Drury had no idea he’d even been nominated for his efforts pushing for a change in the law, but being nominated by other retailers is an honor. The Retailers Association reviewed dozens of applications from across the state for 10 specific awards given out.
“Sometimes it’s hard for retailers to add their voice on issues at the State Capitol and other levels of government, but Mike Drury is well practiced as he’s been doing it for over 20 years in advocating for sales tax fairness,” says Bruce Nustad, Minnesota Retailers Association president via a press release. “Mike has been talking with elected officials over and over and over again. Frankly, that’s his secret as an outspoken advocate for advocating for a level the sales tax playing field. As an industry we are so grateful to Mike for sharing his story and his tireless efforts to make sure elected officials understand how their actions impact retailers and communities. Mike is a well-deserved recipient of the Advocate of the Year award.”
“It was a big long fight that lasted 20 years,” says Drury. “I guess they gave me the award because I kept complaining,” he laughs.
“We’ve always known we can compete on price and service, but the playing field has to be level,” said Mike in the press release. “It’s important that people like me tell their story and talk to politicians. They need to hear how things impact you and what’s going on in your store. Often the best thing to do is just pick up the phone and call. They need to hear from you directly.”
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