August 8, 2019

Tariffs

Jewelers of America ensures our members are the most informed on legislative issues that can affect jewelry businesses. In our latest Legislative Update, we update you on the latest movement on the Trump Administration’s trade war with China and how last year’s sales tax decision by the U.S. Supreme Court will affect jewelers at the state level and beyond.

 Tariffs & the Jewelry Industry

Jewelers of America is closely watching the Trump Administration’s trade war with China, with the latest moves potentially hurting jewelers during the all-important holiday selling season. The ongoing trade war means uncertainty for both businesses and consumers. According to the National Retail Federation, tariffs have cost American small businesses, farmers, workers and families over $25 billion so far. In June, during JA’s annual Fly-In to Washington, D.C., JA Members shared concerns over the U.S. Trade Representative’s (USTR) proposed tariffs that included jewelry.

The current proposed tariffs are at a rate of 10 percent on products, including gemstones and jewelry from China. While the administration delayed tariffs on certain goods imported from China until December 15, to prevent an impact on U.S. holiday sales, jewelry products did not get a reprieve. If implemented on September 1, the tariffs will hit just as jewelers are gearing up for the holidays.

Additionally, some jewelers have been feeling the effects of earlier tariffs, at 25 percent, that included jewelry boxes and packaging from China.

What it Means for Jewelers

If implemented, tariffs could force retailers to eventually raise prices on consumer goods imported into the U.S. from China, including jewelry – and the tariffs could increase down the road if the U.S. and China are unable to reach a deal. According to U.S. Census Bureau data, in 2018, China imported into the United States $2.09 billion in jewelry, $233 million in gem diamonds, and $1.01 billion in gemstones.

JA’s Position and Advocacy on Tariffs

Jewelers of America believes China should be held accountable for unfair trade practices and we must protect the intellectual property and competitiveness of America companies. However, imposing tariffs – which put the bulk of the burden on U.S. consumers and businesses -- is not the answer. We will continue to urge Congress to push the Administration to make a deal and end the trade war, especially as it threatens holiday sales.

Take Action

Send JA's talking points and your opinion on the proposed tariffs, by sending a message to your representatives through JA’s Legislative Action Center.


Sales Tax Update

Background

Last June the United States Supreme Court made a landmark decision that has dramatically altered the playing field for sales tax collection across the country. See full details here. Jewelers of America was in favor of the Court’s decision and provided supporting evidence with other retail organizations in legal briefs in 2017 and 2018. The Court ruled that even if a business doesn’t have a physical presence in a state, it could be required to collect sales tax from customers if it had a significant economic nexus. Since that decision, of the 45 states that collect sales tax, more than three dozen have begun requiring collection from retailers who meet certain thresholds. These include gross sales, number of transactions or both, to residents in their respective states. Those states that aren’t requiring it yet are expected to do so eventually.

Timing of implementation varies by state and could change, but up-to-date information is available from the Sales Tax Institute, among others. It includes details on the thresholds for collecting sales tax and effective dates.

Impact to Traditional Retailers & Jewelers

Traditional retailers will be affected if they do a significant amount of business outside of their home state in states that have begun to require remote sellers to collect sales tax.

For example, if your store is based in Arizona, but you have a number of clients in California that you ship merchandise to, as of April 1, 2019, you are required to collect and remit California sales tax on those purchases if you are either selling $100,000 in gross revenue or have 200 or more transactions to residents in the state.

If you don’t meet the minimum thresholds in states you’re selling to remotely, you are not currently required to collect.

What You Need to Do

Most states have indicated they will not seek retroactive liability. In fact, state revenue departments are working on guidance to help remote sellers comply.

With various laws and requirements being implemented across the country, it is important that jewelers understand if, where, when and how they need to collect sales tax on remote purchases. Jewelers of America recommends taking the following steps:

  • Look at where your current (and future) customers reside. Software provider Avalara offers an online tool where businesses can check their nexus.
  • Calculate the amount of business you are doing with customers in these states. Time periods for when states are measuring nexus requirements vary, but looking at business over the previous and current year should provide a good indication if you’ve passed (or are close to passing) the required criteria for collecting sales tax.
  • Once you determine where you’re doing business and how much, review the current laws in those states.
  • If you are required to collect sales tax in certain states there are a number of additional steps you can take:
    • Discuss the new sales tax laws with your accountant or a tax professional to help determine what resources you’ll need to collect sales tax
    • Visit the website for the Streamlined Sales Tax Governing Board which provides a wealth of information for remote sellers. The project formed in 2000 and developed the Streamlined Sales and Use Tax Agreement (SSUTA) in order to make collection of sales tax more efficient and less burdensome for sellers. As of this writing, 24 states are members of the SSUTA. Those states will pay for the software remote sellers need to collect and remit tax in their states. In addition to information about registering and collecting tax in member states, other resources at the site include:

Jewelers of America has conducted two webinars on the new landscape for sales tax fairness – in September 2018 and January 2019 and hosted an update at the Jewelers of America National Convention that took place July 28-29 in New York City. JA members can learn more about the presentation – put together by CliftonLarsenAllen LLP here.

JA’s Advocacy Continues

Jewelers of America continues to monitor the state implementation process. While we are not actively pushing for federal legislation at this time, there may still be need for Congressional action down the road.  

More Information

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