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Dateline: October 15, 2008 ... Charlotte, NC
Contact: William Miller, The Flower Hut
Phone 1: (800) 525-3162
Phone 2: (704) 535-1041
Fax: (704) 535-5378
E-Mail: sales@flowerhut.com
Web Address: http://www.flowerhut.com
CHARLOTTE, NC - October 15, 2008 - While Bill Miller was browsing
through the "Florist" section of the Charlotte, NC telephone
directories this Spring, he inadvertently stumbled on a situation that
may be costing North Carolina citizens as much as Ten Million Dollars
a year in lost Tax Revenues.
Miller is the owner of the Flower Hut, Yahoo Shopping's highest ranked
florist in Charlotte, so he usually knows what's going on in town,
"But I didn't recognize the names of several of the advertisers as
being local merchants. I was curious, so I decided to do a little bit
of checking."
Miller learned that the "florists" whose names he didn't recognize
were actually Floral Marketers located in other states. Finding their
exact locations wasn't easy because their call center operators were
devious in answering his questions, and their websites did not
indicate their physical location. But a little research allowed him to
verify that these were all out-of-state merchants that were "posing"
as local flower sources.
But the real surprise happened when he started to place "test" orders
and learned that none of them was charging North Carolina sales tax.
Miller knows that if a merchant is out of state, and not actively
advertising in another state, then popular convention is that no sales
tax is charged.
"But, Miller pointed out, "these businesses are advertising in local
publications! Doesn't that mean that they are actually doing business
in North Carolina? And shouldn´t they be paying taxes just like The
Flower Hut does?"
He turned to his CPA and immediately learned the answer. According to
North Carolina Statutes, if a retailer is purposefully or
systematically exploiting the market by using the media, then this
creates nexus with the State. "Nexus" is just a fancy term for doing
business in North Carolina.
Based on Miller's recent experience, and expanding that to the 600
florists in North Carolina, he estimated the sales tax that these
"florists" should have paid the State was around a million and a half
dollars per year. "But I think my estimate is way too low," Miller
stated. "That's because the flower business is highly seasonal, with
huge order volumes around Christmas, Valentine's Day and Mother's Day.
I wouldn't be surprised if North Carolina's actual tax loss isn't
closer to ten million dollars."
Miller then pointed out that many of these companies have been
exploiting the North Carolina market for close to a decade, so the
amount in back taxes might be as high as fifty million dollars.
"I hope," Miller concluded, "that North Carolina authorities move on
this in a timely fashion. North Carolina merchants are losing lots of
sales to these Phony Florists, and the State is losing Millions in tax
revenues. I've sent a detailed report to the North Carolina State Tax
Fraud Hotline. But so far, I haven't heard anything back from them."
Interview Contact:
William Miller, The Flower Hut
Telephone: 800-525-3162 or 704-535-1041
FAX 704-535-5378
sales@flowerhut.com
http://www.flowerhut.com
The Flower Hut
5208 E. Independence Blvd.
Charlotte, NC 28212
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