Online Tire Sales: Mandatory Sales Tax Collection Would Even the Odds

Bob Ulrich
Posted on February 28, 2017

Selling tires online to consumers remains a hot topic in our industry, especially if tire manufacturers are doing the selling.

In the case of Goodyear Tire & Rubber Co. and Michelin North America Inc., dealers have to sign up to be part of the program; Goodyear says all of its company-owned stores are on board.

Some dealers remain opposed to the idea, so they are not considered preferred online dealers. Some are begrudgingly participating in the program. And others have embraced it wholeheartedly.

Other tire manufacturers are sure to follow suit. Even one of the largest mass merchandisers in the U.S., Sears, Roebuck and Co., is selling tires online through its Sears Auto Centers.

If you are not selling tires online in some way, you should be. If you believe tire manufacturers are competing against you by selling online, then do it yourself.

Only 5% to 6% of the 236 million replacement shipments in the U.S. last year were sold online, with Tire Rack Inc. and Discount Tire Direct Inc. accounting for the vast majority of that. If Inc. ever starts buying tires directly from the manufacturer, look out. That percentage would probably reach double digits.

I doubt the percentage will ever top 15% of the market because the need for installation helps protect our industry from excessive online sales growth. Still, even reaching double digits could be considered a watershed event.

The most important issue is really not who sells tires online, but whether or not they have to collect sales tax. That remains a problem, and something you should be aware of if and when you sell online.

Here is the rule: You have to collect sales tax on internet tire sales from customers in those states where your business has a physical presence.

Roy Littlefield IV, director of government affairs for the Tire Industry Association (TIA), says the “physical presence rule” is based on a 1992 United States Supreme Court decision, Quill Corp. v. North Dakota, “that addressed the obligations of mail order businesses to collect sales tax on out-of-state sales. The decision has been extended to include online retailers.”

Any control over the following qualifies your business as having a physical presence in a state: 1) a warehouse, 2) a store, 3) an office, or 4) a sales representative.

If ever starts buying tires directly from the manufacturer, look out.

If you do not have a physical presence in the state, you are not required to collect sales tax for an internet-based sale to someone in that state, according to the ruling. But each state can pass legislation to overrule that decision, so if you have a physical presence in more than one state, you should be aware of each state’s internet sales tax rules.

“Collection of sales tax on internet sales has been a matter of ongoing debate both within individual states and at the federal level,” says Littlefield.

There is no state sales tax in Alaska, Delaware, New Hampshire, Montana and Oregon, so collecting sales tax in those five states is a non-issue under current law.

In 34 of the remaining 45 states, plus the District of Columbia, collecting sales tax may be required regardless of physical presence. Often referred to as the “Amazon laws,” they apply to large online sellers.

Those states are Vermont, Alabama, Georgia, Maryland, New York, Texas, Arizona, Illinois, Massachusetts, North Carolina, Utah, California, Iowa, Michigan, North Dakota, Virginia, Colorado, Indiana, Minnesota, Ohio, Washington, Connecticut, Kansas, Nebraska, Pennsylvania, West Virginia, Kentucky, Nevada, South Carolina, Wisconsin, Florida, Louisiana, New Jersey and Tennessee.

That brings us to the federal Marketplace Fairness Act, which was first proposed in 2013, and failed again in 2015.

“As in previous versions, the 2015 Act would allow states to require sellers not physically located in their state to collect taxes on online and catalog sales made to people in their state,” says Littlefield. “Sellers that make $1 million or less in annual sales and have no physical presence in the state would be exempt from this requirement.”

States would have to meet certain criteria to simplify their sales tax laws and make sales tax collection easier before they could require sellers to collect the tax.

TIA supported the Marketplace Fairness Act, but Littlefield says it failed because Republicans in the House of Representatives see this as a tax increase. Fortunately, Republicans in the Senate and some Democrats “have seen it as a way for local businesses to be able to compete with large online competitors who are evading the taxes in many cases.”

I hope there will be a Marketplace Fairness Act of 2017. ■

If you have any questions or comments, please email me at

To read more of Bob Ulrich's editorials, see:

Is Our Love Affair With the Car Over?

Now That Trump Will Be President... Proactively Offer Your Support or Constructive Criticism

Race Against a Racing Ban

P Zero World Re-Defines the Independent Tire Dealer

Related Topics: Bob Ulrich, Bob Ulrich editorial, Editorial, online sales

Bob Ulrich Editor
Comments ( 0 )
More Stories
The first week of July 2018 will mark the launch of TireHub, the joint distribution project of Goodyear and Bridgestone.

TireHub Gets the Green Light From Regulators

TireHub LLC is a go. The joint venture for passenger and light truck tire distribution between Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. will begin serving customers the first week of July.  


Nokian Is Adding Capacity for Passenger Tires

Nokian Tyres plc is increasing production capacity for passenger car tires at its factory in Nokia, Finland, by approximately 30%. The tire maker will hire 80 new employees and run nine additional shifts each week.  


Vogue Promotes $75 Summer Rebate

Vogue Tyre and Rubber Co. is rolling into summer with a consumer rebate for purchases of a set of four Vogue Signature V Black tires.

Triangle leader Ding Yuhua died unexpectedly on June 13, 2018.

Triangle Tyre's Chairman Ding Dies at 69

Triangle Tyre Co. Ltd. announced that Ding Yuhua, executive chairman and director of the board, died unexpectedly on the morning of June 13, 2018. He was 69 years old.

The Evolve allows users to add images ot their vehicle reports.

OTC Updates Bravo 3.1.1 Diagnostics Software

OTC Tools has released the Bravo Evolve and Encore diagnostic software, the latest major updates to its diagnostic tools. The updates include new features and expanded diagnostic capabilities and increased vehicle coverage.

The second day of Falken Academy is spent behind the wheel, both on the track at the Auto Club Speedway and on the Cleghorn Trail. On the trail, four tires on the ground is optional in some parts.

Falken Invests in Its Dealers With Falken Academy

A year ago Falken Tire Corp. was investing its money into marketing itself as the Official Tire of Major League Baseball. This year, the tire maker is spending that money on independent tire dealers.  

The fifth annual SEMA Battle of the Builders will be showcased in Las Vegas at the SEMA Show.

Registration Opens for SEMA Battle of the Builders

Builders who have a car or truck displayed at the 2018 Specialty Equipment Market Association (SEMA) Show, held Oct. 30-Nov. 2 in Las Vegas, can bring added exposure to their vehicles and the products that make their builds unique by entering the SEMA Battle of the Builders competition online.

Nearly 200 international and retread manufacturers ad distributors met with buyers at the 2018 Latin Tyre Expo.

Successful Ninth Latin Tyre Expo Held in Panama

The ninth annual Latin Tyre Expo showcased nearly 200 international tire and retread manufacturers and distributors who met and connected with buyers over the course of the three-day event.


Bolt On Technology Shops Reach the 15 Million Photo Mark

If a picture is worth 1,000 words, then the number of words represented by more than 15 million photos would surpass 15 billion. The number of repair shops using the Mobile Manager Pro automotive software solution recently reached that milestone, according to Bolt On Technology LLC.

Thanks in part to its on- and off-road tire designs, the Atturo booth was both figuratively and literally colorful.

Atturo Expands Its On- and Off-Road Horizons in Europe

Atturo Tire Corp. is a specialist producer and supplier of tires dedicated to the SUV, crossover, 4x4 and light truck sectors. Based in Waukegan, Ill., the enterprising American company still found time to support the first Tire Cologne show in Europe.

Yokohama displayed its products in style at The Tire Cologne.

Yokohama Showcases Its Products in Style at Tire Cologne

Yokohama Rubber Co. Ltd. supported the first Tire Cologne show in Cologne, Germany, in an eye-catching and professional fashion. Its booth highlighted the company’s total commitment to the manufacture and on-going development of premium car, winter and "hobby" tires.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!