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Kentucky Retail Sector Remains Somber
KRF issues responses from fall membership survey
Contact: Ted Mason, 502-875-1444, tmason@kyretail.com
The mood of Kentucky’s independent retailers regarding the financial condition of their businesses continues to be somber. According to the Kentucky Retail Federation’s latest fall economic survey results, nearly 72 percent of respondents believe their businesses are in either the same or worse financial shape than at the same time in 2012. Only 24 percent responded that their business was in better shape financially. “Going into this year’s holiday shopping season with many retailers cautious about the long term profitability and viability of their businesses is concerning to say the least,” said Tod Griffin, President of the Kentucky Retail Federation. “We’re still not seeing much movement in the economy that would indicate a full recovery in the independent retail sector anytime soon.”
For Full Press Release created by Ted Mason Vice President Association Services
OPINION EDITORIALOct 22, 2013Contact: Tod Griffin, 502,875,1444 or info@kyretail.com
Retailers see dramatic cut as they “Check Out Line 26” of their state sales tax returnIndustry braces for $11 million reimbursement cut
Retailers throughout the Commonwealth are experiencing drastic reductions in the money they receive to help defray the costs they incur for serving as tax collectors for state government. 
The reduction was included in a last minute, $100 million deal to shore up the state pension fund during the 2013 Regular Session and retailers were hit to the tune of $11.4 million.
Why do retailers receive a collection allowance? The state forces Kentucky retailers to be the tax collector for state government. Although the consumer is responsible for paying the state’s six percent sales tax when purchasing taxable items, it is the retailer, acting as the state’s agent, who collects this tax and remits it to the government on the consumer’s behalf. The retailer receives a vendor discount (allowance) on the sales tax return submitted to the state along with the tax payment. This vendor allowance is a customary way governments “pay” their collection agents for doing its job.
In reality, the allowance does little to offset the actual cost of doing the government’s work (the most recent estimate shows that the allowance covers at most 25 percent of the actual cost). In fact, it rarely even covers the credit and debit card transaction fees that banks levy on the sales tax portion of a purchase. Collecting the tax and ensuring that you are in compliance requires both time and money. Small and medium-sized retailers bear the greatest burden since they have a lower sales volume over which to spread fixed costs related to collection such as required software and cash register programming.
Before passing the pension deal, legislators were told that the reduction would only impact a small group of very large retailers and that at least 80 percent of retailers would not be negatively affected. But actually, the reduction in vendor allowance will have an impact on any retailer that does slightly more than $50,000 in taxable sales a month. If that amount seems high, consider that most retailers have relatively high volume sales but a very narrow profit margin. For a business that is open six days a week, that's about $2,000 a day in taxable sales. Many retail businesses, including restaurants, meet that threshold.
Unfortunately, since there was no public input allowed before the bill passed, the Kentucky Retail Federation is now working to provide lawmakers with a more accurate picture of who this cut actually impacts. To illustrate the point, we’re compiling a list of retail stores that have been hurt. We invite retailers throughout the state, including nonmembers, to join the list by visiting our website at www.kyretail.com and clicking the link to “Check Out Line 26.”
Tod Griffin is President of the Kentucky Retail Federation. The Kentucky Retail Federation is the "Voice of Retailing" throughout the Commonwealth, representing retailers of all types and sizes since 1939. From Main Street to the mall, retailers enhance Kentucky's communities and provide a better quality of life for Kentuckians everywhere. Kentucky's retail industry employs
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By Tod Griffin, Kentucky Retail Federation President From the July 2013 edition of The Kentucky Retailer
Massie sides with out-of-state retailers in sales tax fairness debateIt’s important to know where the people you elect stand on the issues that matter the most to you. Federal passage of the Marketplace Fairness Act is one of those issues and that’s why it is so troubling that Congressman Thomas Massie (R-4th District) has chosen to publically side with out-of-state retailers rather than stand by the men and women who live and work in the communities he represents.On June 16, Massie joined a group of House members in opposition of the Marketplace Fairness Act during a press conference in Washington, DC. During his speech, Massie said that if retailers want to compete “…I suggest you do something innovative, write a new piece of music, treat your customers better than somebody else, invent something, come up with a better way, a more efficient way to manufacture your products…”The statement is both insulting and disappointing as it shows little to no comprehension of what sales tax fairness is. It’s not a tax issue; it’s a matter of compliance. While no one wants to pay more taxes, the simple fact is that a tax should be applied fairly and across the board. Currently, the federal government is giving out-of-state retailers a loophole to avoid collecting the state sales tax. Online and catalog transactions are already subject to the state’s sales and use tax. However, if the retailer is out-of state and doesn’t voluntarily collect the sales tax, the consumer is responsible for remitting the purchase as a use tax on his or her state income tax. Of course, the vast majority of consumers don’t do this because compliance is cumbersome and enforcement is nearly impossible.The Marketplace Fairness Act seeks to level that playing field by allowing states to require remote sellers – out-of-state online and catalog retailers – to collect state sales taxes. By opposing the Act, Massie is essentially saying he wants to see a “Why buy here?” sign placed at the entrance to every Kentucky store. He’s basically thumbing his nose at the one in four Kentucky jobs that this industry provides. Beyond all else, he’s saying that government should continue to be in the business of picking winners and losers.During the press conference and in a letter to House leadership, Massie cited a desire not to impede the development of e-commerce. As I shared with the Congressman in KRF’s official statement and a formal letter, we also support that stance. After all many Kentucky retailers already sell goods online and appreciate the opportunity to reach consumers in another venue. However, you can’t support the expansion of one segment of the retail economy at the direct expense of another, particularly when the other is the men and women who actually operate in Kentucky. I also shared that by continuing to oppose the Marketplace Fairness Act he is sending a message to Kentucky retailers that he does not support them nor does he value the contributions they make.While we’re disappointed, we remain hopeful that Congressman Massie will reconsider his position and instead stand with Kentucky retailers. In the meantime, links to both the press conference and the letter to House leadership can be found on KRF’s website at www.kyretail.com.
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Media ReleaseJune 18, 2013Contact: Laura Leigh Goins, 502.682.6718
CLICK HERE TO DOWNLOAD A COPY OF THE LETTER
Kentucky Retailers to Massie: Stand With Us and Support Sales Tax Fairness
Kentucky Retail Federation responds to D.C. press conferenceThe Kentucky Retail Federation responded to a June 18, 2013 Washington, D.C. press conference featuring Representative Thomas Massie (R-4th District) in which Massie voiced opposition to legislation that would eliminate a loophole that allows out-of-state retailers to avoid collecting the state’s sales tax.In a letter to Massie, KRF President Tod Griffin stated:
“Retailers across your district and our Commonwealth are rightly angry that you support expanding one segment of the retail economy at the direct expense of the men and women who actually operate in Kentucky as part of an industry that provides one in four Kentucky jobs. After all, government should not be in the business of picking winners and losers.“For more than a decade, out-of-state retailers have been using Kentucky retailers as their showrooms. They have done so without creating Kentucky jobs, spending money in our economy or contributing to our communities. These are the businesses you support with your stance on Marketplace Fairness. Today you described this as the ‘Offshore Retail Act.’ We have to agree, because until it passes, more and more Kentucky retail jobs will be sent “offshore.”“Let’s be clear, this is not a new tax and it is not unfairly cumbersome. It is, however, a loophole that allows internet retailers to enjoy a six to 10 percent competitive advantage over local businesses.”According to Griffin, passage of the Marketplace Fairness Act was the number one federal priority for the Kentucky Retail Federation and an important indicator of each member of the delegation’s support for the retail industry.Griffin added, “It is time to stand with Kentucky retailers. By continuing to oppose the Marketplace Fairness Act you are sending a message to Kentucky retailers that you do not support them and do not value the contributions they make.”
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FOR IMMEDIATE RELEASE MEDIA RELEASEJUNE 4, 2013Contact: Laura Leigh Goins, 502.682.6718, lgoins@kyretail.com
Kentucky retailers aren’t convinced that business is getting betterKRF members concerned with impact of health care costs and competition with online retailersResults from a survey of Kentucky Retail Federation members reflect that more than two-thirds of respondents (68%) do not believe that their business will be better off this year than last.
“Although we’re seeing reports about consumer confidence rising and a better housing market nationally, this is a reflection of the rising cost of doing business – including employee benefits, taxes, government regulations and goods,” said Tod Griffin, Kentucky Retail Federation President.
Regarding sales specifically, 42 percent of respondents stated they felt sales would be equal to those of 2012, while 40 percent 
believed they would see a decrease. The remaining 18 percent forecasted an increase in sales.
When asked what has had the biggest impact on their ability to grow their business, KRF members cited health care reform, highlighting a growing concern that so much is still unknown about the implementation of the Affordable Care Act (ACA).
“We continue to hear from our membership that they don’t know how to plan for the ACA,” Griffin added. “They are hesitant to take on new staff or to invest in their own business growth until they know how much health care reform is going to cost.
Retailers continue to cite concern about competing with online retailers. More than 93 percent of survey respondents believe that they will lose sales to an online retailer in 2013.
“Kentucky retailers have asked the state’s congressional delegation to support sales tax fairness legislation that is currently pending in Congress,” KRF’s Vice President of Communications and Public Relations Laura Leigh Goins said. “Our members can compete with the retailer next door, even when the retailer next door is selling online. However, they can’t compete when the online retailer is out-of-state and receives a six percent advantage because they are not required to collect the state’s sales tax.”
For the first time since KRF began surveying members on the economy in 2010, a significant number of respondents cited the decline in Kentucky’s coal mining industry as a concern. As the survey was being tabulated, the Kentucky Energy and Environment Cabinet released numbers that show coal jobs in Kentucky have dropped to the lowest level recorded since the state started keeping count in 1950.
“The numbers verify what we’ve heard anecdotally from our members over the past year,” Griffin added. “The future of our state’s coal industry will have a big impact on retail and other sectors.”
The Kentucky Retail Federation also asked members if they have seen an increase in the price of goods. According to results, 89 percent have and more than 85 percent have been forced to pass along the increase to consumers.
The eight question survey, mailed to a random sampling of the Federation’s 6,000 members just after the April income tax deadline, included questions about the economy’s impact on their business, employment and workforce, as well as sales projections. This is the first time that members have been asked to participate in a Spring survey on the topic, but the Federation has performed an annual survey each fall.
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For Immediate ReleaseMedia StatementMay 7, 2013
Contact: Laura Leigh Goins, 502.682.6718 KRF Statement on U.S. Senate Passage of Sales Tax Fairness Legislation (S.743)Frankfort- Kentucky Retail Federation President Tod Griffin had the following to say about the Monday, May 6 passage of S.743, the Marketplace Fairness Act: “We regret that neither of Kentucky’s Senators voted for the Marketplace Fairness Act. However, we have hope that they will eventually come to understand just how important sales tax fairness is to the retailers of our state. For the past decade, out-of-state online retailers have been using Kentucky retailers as their showrooms. And they have done so without creating Kentucky jobs, spending money in our economy or contributing to local communities. "Let’s be clear, this is not a new tax. A tax is already due on each sale made in Kentucky, whether it is made from a smartphone in Paducah or a store in Pikeville. It is time to close the loophole that allows government to pick winners and losers in the marketplace. "The Kentucky Retail Federation applauds the Unites States Senate for passing S.743. Now, we ask our congressional delegation in the U.S. House of Representatives to step up and stand behind Kentucky retailers by cosponsoring and supporting the Marketplace Fairness Act of 2013. Congress must pass this legislation to ensure our tax laws keep up with the modern marketplace.”
_______________________________________________________________________________________ FOR IMMEDIATE RELEASE STATEMENT APRIL 26, 2013 Contact: Laura Leigh Goins, 502.682.6718 or lgoins@kyretail.comStatement from Kentucky Retail Federation President Tod Griffin on the Marketplace Fairness Act: “For the past decade, out-of-state online retailers have been using Kentucky retailers as their showrooms. And they have done so without creating Kentucky jobs, spending money in our economy or contributing to local communities. It is time to close the loophole that allows government to pick the winners and losers. Let’s be clear, this is not a new tax. A tax is already due on each sale made in Kentucky, whether it is made from a smartphone in Paducah or a store in Pikeville. The Marketplace Fairness Act of 2013 eliminates the six to 10 percent competitive advantage currently enjoyed by many internet retailers at the expense of local businesses. The Act also takes into consideration concerns that requiring out-of-state retailers to collect the sales tax will be overly burdensome – particularly to smaller, independent retailers. The Act includes provisions that require the simplification of the collection process as well as the exemption of remote sellers with taxable sales of under $1 million a year. We ask our congressional delegation to step up and stand behind Kentucky retailers by supporting the Marketplace Fairness Act of 2013. Congress must pass this legislation to ensure our tax laws keep up with the modern marketplace.” _______________________________________________________________________________________
FOR IMMEDIATE RELEASEGUEST OPINION EDITORIAL – Second ReleaseAPRIL 26, 2013Contact: Laura Leigh Goins, 502.682.6718Editor’s Note: Due to current Senate action and increased interest by media members, KRF is reissuing this updated version of an opinion editorial disseminated by the Federation in March.Kentucky retailers ask congressional delegation to support Marketplace Fairness Act of 2013Kentucky retailers aren’t looking for a handout from Washington. They just want a sale made from a smartphone in Henderson or a laptop in Pikeville to be treated the same way as a purchase made at a store in Danville.Before that can happen, Congress must pass the Marketplace Fairness Act of 2013, federal legislation that would give states the authority to require that out-of-state merchants collect and remit state sales taxes. Currently, the United States Senate is poised to vote on the proposal and state and national support for Marketplace Fairness has grown to include labor and business interests, state and local governments, as well as retailers of all types and sizes.Let me be clear, this is not a new tax. The sales and use tax is already due on each sale made in Kentucky – including those made online. This is a matter of compliance. The federal government is giving out-of-state retailers a loophole to avoid collecting the state sales tax. Consumers are still responsible for reporting the purchase on their state income tax if it is not collected at the point-of-sale. Of course, the vast majority of consumers don’t do this because compliance is cumbersome and enforcement is nearly impossible.For the past decade, online retailers have been using Kentucky retailers as their showrooms. And they have done so without creating Kentucky jobs, spending money in our economy or contributing to local communities.By giving states the authority to enforce existing tax laws, the Marketplace Fairness Act of 2013 eliminates the six to 10 percent competitive advantage currently enjoyed by many internet retailers at the expense of local businesses.The Act also takes into consideration concerns that requiring out-of-state retailers to collect the sales tax will be overly burdensome – particularly to smaller, independent retailers. The Act includes provisions that require the simplification of the collection process as well as the exemption of remote sellers with taxable sales of under $1 million a year.We ask our congressional delegation to step up and stand behind Kentucky retailers by supporting the Marketplace Fairness Act of 2013. Congress must pass this legislation to ensure our tax laws keep up with the modern marketplace.Tod Griffin is President of the Kentucky Retail Federation and Chair of the Kentucky Coalition for Sales Tax Fairness. The Kentucky Retail Federation is the "Voice of Retailing" throughout the Commonwealth, representing retailers of all types and sizes since 1939. From Main Street to the mall, retailers enhance Kentucky's communities and provide a better quality of life for Kentuckians everywhere. Kentucky's retail industry employs 380 thousand Kentuckians and pays more than $9.3 billion in wages annually. Retailers collect over $2.8 billion in state sales tax and pay millions in other taxes to state and local governments.
_______________________________________________________________________________________FOR IMMEDIATE RELEASEGUEST OPINION EDITORIALMARCH 20, 2013
Kentucky retailers ask congressional delegation to support Marketplace Fairness Act of 2013Kentucky retailers aren’t looking for a handout from Washington. They just want a sale made from a smartphone in Henderson or a laptop in Pikeville to be treated the same way as a purchase made at a store in Danville or Frankfort. Before that can happen, Congress must pass the Marketplace Fairness Act of 2013, federal legislation that would give states the authority to require that out-of-state merchants collect and remit state sales taxes. Currently, the United States Senate is poised to vote on the proposal and national support for Marketplace Fairness has grown to include labor and business interests, state and local governments, as well as retailers of all types and sizes. In Kentucky, we’ve formed the Kentucky Coalition for Sales Tax Fairness, comprised of local business groups from across the Commonwealth to encourage our congressional delegation to support the Marketplace Fairness Act. Congressional support for the measure is also increasing. The House and Senate versions of the bill have 53 cosponsors, including both Democrats and Republicans. It’s important to note that this is not a tax issue; it’s a matter of compliance. While no one wants to pay more taxes, the simple fact is that a tax should be applied fairly and across the board. Currently, the federal government is giving out-of-state retailers a loophole to avoid collecting the state sales tax. Online and catalog transactions are already subject to the state’s sales and use tax. However, if the retailer is out-of state and doesn’t voluntarily collect the sales tax, the consumer is responsible for remitting the purchase as a use tax on his or her state income tax. Of course, the vast majority of consumers don’t do this because compliance is cumbersome and enforcement is nearly impossible. For the past decade, online retailers have been using Kentucky retailers as their showrooms. And they have done so without creating Kentucky jobs, spending money in our economy or contributing to local communities. By giving states the authority to enforce existing tax laws, the Marketplace Fairness Act of 2013 eliminates the six to 10 percent competitive advantage currently enjoyed by many internet retailers at the expense of local businesses. Closing the loophole would also provide Kentucky more than an estimated $220 million in tax revenue that could be used to shore up budget shortfalls. We ask our congressional delegation to step up and stand behind Kentucky retailers by cosponsoring and supporting the Marketplace Fairness Act of 2013. Congress must pass this legislation to ensure our tax laws keep up with the modern marketplace.
Tod Griffin is President of the Kentucky Retail Federation and Chair of the Kentucky Coalition for Sales Tax Fairness. The Kentucky Retail Federation is the "Voice of Retailing" throughout the Commonwealth, representing retailers of all types and sizes since 1939. From Main Street to the mall, retailers enhance Kentucky's communities and provide a better quality of life for Kentuckians everywhere. Kentucky's retail industry employs 380 thousand Kentuckians and pays more than $9.3 billion in wages annually. Retailers collect over $2.8 billion in state sales tax and pay millions in other taxes to state and local governments.
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