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  1. #1
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    June 30th, 2011
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    Who was previously required to charge Sales Tax?
    I believe I understand the details of the new nexus law, but could someone describe how the law worked prior to this new bill being passed?

    I'm on the Stride-Rite website, shipping to CA with a CA billing address, and the site isn't charging me Sales Tax. They definitely have brick and mortar stores in California. I thought that, before the new law, having a brick and mortar store established nexus and thus required the merchant to charge sales tax.

    Does this make sense to anyone? What's also interesting is that Stride Rite's tax policy isn't consistent across all their other brands (Collective Brands such as Keds and Saucony).

    FYI, on the Stride Rite website it currently says:

    We are required by law to charge sales tax on all orders delivered to AL, CT, IN, KY, MA*, OH, NV, NY, VA, and WA.
    *For Massachusetts, only on footwear individually priced at $175 or more
    Last edited by NewAffiliate; June 30th, 2011 at 09:45 PM.

  2. #2
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    They probably have their web presence headquartered in one of the states in that list and have it set up as a separate business entity than their walk-in stores. I know some companies have done that. Don't know it if will work, though.
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  3. #3
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    Quote Originally Posted by AffiliateHound View Post
    They probably have their web presence headquartered in one of the states in that list and have it set up as a separate business entity than their walk-in stores. I know some companies have done that. Don't know it if will work, though.
    This is what Barnes & Noble and many other "brick and mortar" stores did in the late 1990's. They created separate corporations for their online activities, and maintained some degree of separation (sometimes even having slightly different ownership, so that XYZ Stores Inc. owned 65% of XYZ.com Inc, with another 35% owned by venture capital firms or public shareholders). But they were using the same brands & trademarks, and often cross-promoted (with signs in stores urging in-store customers to go to the web site, and store locators [for company-owned stores] on the web site urging online customers to go to the store) in ways that blurred the line. Some bookstores included in-store kiosks that customers could use to browse and place orders at the online site for books not stocked in the store. When conflicts arose, it usually was clear that the "old company" retained complete control over nearly all business decisions at the dot-com company (and in some cases, the old company ended up "buying back" other shareholders' interest in the dot-com company and merging the operations).

    State sales tax agencies cried "foul," and there were some battles and lawsuits and settlements, and a few years ago some of the big-box retailers (including B&N) apparently agreed (all at the same time) to start charging sales tax for online orders from any state where they operated a retail store. (They probably negotiated a deal so they didn't have to pay back taxes or penalties if they agreed to start collecting the tax.)

    I'm sure one reason for the compromise was their recognition of the value of "ship-to-store" and "pick up at store" options, which intertwine the entities beyond any reasonable claim that they are "independent."

    I don't know about Stride-Rite. Their store locator includes both "Stride-Rite" stores and other retailers; I don't know if the retail stores are company owned and operated, or perhaps they're independently owned (maybe franchised). I don't know if pricing is synchronized on just some products (such as those on sale, or those which are sold only at list price because the manufacturer is seeking to avoid "channel conflict" with other retailers of their products). Being a manufacturer of products that are sold in both "company stores" and "other stores" is a different situation than big-box retailers which don't manufacture products at all. Stride-Rite's web site is currently promoting a sale that's both "in-store and online."

    It certainly "smells like" it's one big operation that intertwines online and offline sales operations, and I'm sure that if you called the California State Board of Equalization, either they'll tell you there's already a case pending, or they'll ask you to provide information so they can start a case file.

    But that's not where it ends. Stride Rite's parent company owns four major shoe brands: Saucony®, Sperry Top-Sider®, Keds®, and Stride Rite®. I don't think Saucony (for example) has its own retail stores; I don't know if Stride Rite stores also carry Saucony shoes (probably not), but it certainly looks like StrideRite.com doesn't sell Saucony shoes.

    So, is Stride-Rite in "a maze of twisty little passages, all alike," or "a maze of twisty little passages, all different" -- or something else?
    Last edited by markwelch; June 30th, 2011 at 11:55 PM.

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