Rhode Island’s commonly called “Amazon law,” which taxes online sales by retailers that have a “nexus” or physical presence in the state, forced Nest4Less to move its office from Pawtucket to Attleboro at the end of August in order to stay in business, according to CEO Jesse Kenner.
“I’m not happy about moving out of Rhode Island at all. I’m a Rhode Islander born and raised,” said Kenner, who lives in Providence and has a master’s degree from Rhode Island College. “My grandfather founded a company in Rhode Island, American Insulated Wire, and I was hoping to have my own business in the state.”
Two-year-old Nest4Less does marketing and advertising for home-related products and services ranging from mortgage companies to furniture and security systems.
Although the vision was to remain part of Rhode Island’s emerging tech community, Nest4Less took its CEO, chief financial officer, four full-time employees and a growing client base to Attleboro when its future was darkened by the Amazon law.
“Most of our vendors are out of state and they refused to do business with a company in Rhode Island,” said Kenner.
Nest4Less has about 400 vendors in home-related industries that pay a subscription fee to create an ad or discount featured in its network, either nationally or in a specific market, said Kenner.
“The problem we ran into was that we have companies in California, for instance, and we create an ad or discount for them and Rhode Island was trying to tax them for that,” he said. Massachusetts doesn’t have that same requirement, said Kenner and accountant Alan Litwin, of Kahn, Litwin, Renza & Co., which has offices in Massachusetts and Rhode Island.
“Massachusetts does not have that click-through provision for sales tax,” said Litwin. “Our office in Cambridge is in a hotbed of startup businesses and a number of them would not even consider moving to Rhode Island because of this provision.”
In the four years since Rhode Island’s controversial “Amazon law” went into effect on July 1, 2009, it was only in the first month or so that small businesses called the R.I. Division of Taxation to check the details. Many ended up giving Chief Revenue Agent Donald Englert an earful of their business woes.