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Proposal shifts taxing duty away from catalog printer

The state, not R.R. Donnelley and Sons, would have to collect sales tax from some of Donnelley's clients.


© St. Petersburg Times, published April 27, 2000

TALLAHASSEE -- One of the largest printers in the country, which has a branch near downtown St. Petersburg, will not have to collect tens of thousands of dollars in sales taxes under a plan a local lawmaker is pushing through the Legislature.

The plan, which would affect only a handful of printers in Florida, could cost the state nearly $300,000 a year in lost revenue.

R.R. Donnelley and Sons Co., which prints and ships catalogs for companies such as Lands' End and L.L. Bean, would not have to collect Florida sales tax from clients whose products are mostly shipped out of state. Instead, the state would be responsible for collecting the tax directly from the printers' clients.

"This is not a question of whether the tax will be paid," said Sen. Jim Sebesta, R-St. Petersburg, the sponsor of the bill. "The question is who will pay it."

But state economists say otherwise. Shifting the burden to the client -- Lands' End, for example -- to pay tax on its printed catalogs forces the state to track all of Donnelly's business to ensure clients pay their share. In an analysis of the bill, state economists have estimated Florida will lose as much as $280,000 each year in taxes it could fail to collect from the out-of-state companies.

"If they're large, they're usually good taxpayers (but) when you have to chase down purchasers, you don't always have good compliance," said Christian Weiss, chief economist for the state Department of Revenue. "If they don't comply, we only find it on audit."

Sebesta and lobbyists for Donnelley say shifting the tax burden away from printers will make Florida printers more competitive with companies in other states that do not require printers to collect the tax.

But Dominic Calabro, president of the watchdog group Florida TaxWatch, questioned whether the break was fair, since it applies only to large printing companies. "Why are we not doing that for all of the other industries in Florida?" Calabro said. "Competition is important, but we've got to balance it with the well-being of all of our citizens and industries."

Gale Lawler, who handles tax issues for Donnelley, based in Nashville, Tenn., said the company collected only about $30,000 in state taxes last year. He said the state's estimate, which predicts Donnelley would collect about $75,000 in taxes next year, is inaccurate.

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