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This page contains a single entry from the blog posted on December 31, 2011 2:49 PM. The previous post in this blog was The year through a Fish eye. The next post in this blog is Urban League takes another hit. Many more can be found on the main index page or by looking through the archives.

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Saturday, December 31, 2011

Mattress World going under?

First the husband disappears from the TV commercials, and now it appears that the ads are vanishing entirely. The subtexts were Shakespearean in their depth, and without them the local tube will never be the same. Suddenly it's too late to sleep like a baby.

Comments (24)

And so it goes with the advent of Fire Sprinklers.

"...Simply stated, during good economic times, Mattress World grew very quickly, and expanded to service more of the community. However, we did not prepare the business for any potential downturn, and when the recession hit, it negatively impacted our business,..."

Translation: The owners pulled every dime possible out of the company year after year, and when things got tough we folded like a cheap suit.

Translation: The owners pulled every dime possible out of the company year after year, and when things got tough we folded like a cheap suit.

Just guessin', but I'd imagine the property distribution in the divorce did a number on capitalization of business operations going forward.

The mattress gig seems less above board than other businesses. They offer a mattress for free if they can't match a competitors price? Duh, that will never happen because they would simply match the price. But no worries there anyway because guess what? No two stores in the world carry the exact same two models, so price comparisons are virtually impossible.

The 220 % mark up coupled with the sales double talk will often get unsuspecting folks into more than they wanted for less than they pay for. Be prepared to get slimed upon entering the sales floor at most similar establishments. As for all those who pay too much? Well, all that TV time ain't free ya know.

As I recall, they got divorced. When he disappeared from the ads, I figured it was just a matter of time before everything else did, as well.

Yet, one thing I find intriguing: we were hit with, what we consider, an excessive and unfair tax assessment by the State of Washington - this even as an Oregon company, with no retail stores in the State of Washington.

I may be wrong, but I don't think WA can assess taxes on a company with no presence in the state. It seems to me that in order to have a shot at making that fly, they'd have to be able to prove that the company was selling to people in Washington, not collecting and turning over the appropriate sales tax to the state...however, it seems to me that that would be entirely the customer's responsibility.

Something just seems fishy.

It seems to me that in order to have a shot at making that fly, they'd have to be able to prove that the company was selling to people in Washington, not collecting and turning over the appropriate sales tax to the state

I don't think Washington State could even get away with that...they don't have jurisdiction over a business with no physical ties to the state.

I remember a number of years ago Idaho tried to pull that stunt on retailers in Ontario enticing Idaho customers to cross the Snake River and shop tax-free, even sending legal notices all but warning them of the reprecussions of not reporting Idaho sales tax. I'm not sure exactly how it came about but let's just say Idaho got its butt chewed out.

If Washington were to pull a stunt...all it would take is Oregon to notice the Washington State Lottery billboard prominently located next to I-5 in Delta Park...isn't that actually illegal?

A company I worked for was assessed a substantial Washington excise tax for inventory simply warehoused in the state. Perhaps this is what MW is getting hit with.

I don't feel like she needs to explain what happened. Not in this economy.
I'm bummed out about the closing of the London Grill in the Benson. That's another Portland institution that's gone or at least gone after tonight.

The "hard to find location" at 122 & Glisan has had signs up for a few weeks advertising that they're selling off 50% of their inventory. I don't know what they'll do with the other 50%.

By the way, I always hated their slogan. As a mom of 4 kids, I've learned that babies really don't sleep very well, and they wake up frequently at night.

Delivery to Washington residents perhaps?

A while back I saw the ex husband in a commercial for Sleep World
http://www.sleepworld.cc/

Be prepared to get slimed upon entering the sales floor at most similar establishments.

Can't speak for similar establishments, but I bought 3 mattress sets from MW - all name brand, good quality at a really good price. The salesman was knowledgeable, polite and didn't try to steer us toward something we couldn't afford. I had a really great experience there and would recommend MW to anyone. Sorry to see them go away even though I won't be needing another bed for quite awhile. I liked Sherri.

Bartender

Sherri’s operation may have been one of the good ones, and as always let the buyer beware. I am just saying the mattress business overall is well known for being unscrupulous. So for those about to buy a mattress and are a bit confused about the process you might want to take a look at the link here and maybe save a few bucks.

http://mattressscam.com/

London Grill and Foti's.

The Mayans may be right ...

Erik H:
I don't know if this was Mattress World's problem, but it might have been caused by this...

If an Oregon business makes deliveries in Washington using their own trucks they are subject to the Washington Business and Occupation (B&O) tax. If the product is subject to sales tax, the company may also be required to collect the sales tax on the sale.

Good link Gibby, thanks!

It looked like they plan to keep two stores open, for what it's worth....

I used to work in mattresses and it is a shady business. For example, like cars and furniture, they are always on sale. As for price matching, mattress companies use dozens of model names and ticking (the mattress cover) combinations for the same product. You won't find the same product to match in any local area.

"Delivery to Washington residents perhaps?

Posted by Andrew | December 31, 2011 10:37 PM"

Appears that is the case. She's on Larson's show right now.

Pretty harsh in the comments department. Have any of you critics ever owned a business? The cash flow demons can take you down very fast if you get stuck with inventory in a down economy.

I own a business myself and to say that a retail owner like Sherri would be unaware of tax implications of selling her product in a border state is rediculous.

The US Supreme Court has weighed in on the sales tax issue and essentially stated that a retailer like Mattress World must have a Nexus in a state like Washington for Washington to require it to collect sales taxes.

However the US Supreme Court has been ambigious on what constitutes a nexus. Years ago the litmus test was having a physical presense but the court in recent years has declined to hear "Tax Comm'r of the State of W. Va v. MBNA America Bank N.A." among other decisions, which opened the door to a broader interpretation of what constitutes a Nexus.

Mattress World, by advertising in State of Washington, and by referring Washington State customers to a delivery service that would deliver mattresses to Washington, has a Nexus in State of Washington, according to the broader interpretation.

An hour of Googling on the Internet can get any business owner this information.

You cannot convince me that Sherri had enough business acumen to build up a chain of stores and yet would have never been told this by her CPA or legal advisors. She could have easily avoided this through several measures - for starters stating on all sales documents that Mattress World did not deliver to Washington State nor could they recommend anyone who would do so, and secondly through warnings in their literature that Washington residents were liable for sales taxes in Washington if they bought a mattress and carried it back home in their pickup truck. Then lastly by a company policy that Mattress World would not save or record any addressing or other personal information for customers that they did not deliver product to.

An audit by Washington State dept. of Revenue would have thus turned up nothing of any value and Mattress World would have been off the hook.

Or, Mattress World could have simply stated flat out that they collect Washington State sales tax to any buyer who identifies themselves as a Washington resident, and then collected the tax.

But of course, this would likely discourage Washington residents seeking to escape sales taxes on big ticket items from coming down to her stores and buying product. Knowing her, I would guess that a CPA who brought this issue up to her would have probably been told to stuff it.

Here in Oregon we have Jantzen Beach, and Cascade Station, as well as the Ikea store, Home Depot at the Airport, and a plethora of other stores on those locations that exist soley to help Washingon residents dodge their state sales taxes. We know what they are doing, they know what they are doing, and to assume that the Washington State tax people don't know what they are doing is pure hubris. Those stores sell large ticket items and they either collect the tax or they take cash, put the buyer's name down as Santa Claus or the Easter Bunny, and pretend the buyer isn't a Washington resident. Mattress World could have easily done the same and immunized itself.

When a Washington resident, or any other state's resident, walks out of a store in Oregon with goods, there is no sales tax due to Washington or any other state. The sale has taken place in Oregon, and there is no sales tax in Oregon.

However, a person taking that untaxed property into Washington to use it is liable for Washington use tax (same amount as the sales tax), which is not the vendor's responsibility -- the user must pay. If a customer bought a mattress from Mattress World (or a car from Ron Tonkin, or toilet paper from the Portland Costco) and drove it home to the 'Couv in their own pickup, there would be no liability on the part of the vendor to collect anything. The customer is supposed to pay the use tax. With motor vehicles, the customer does so upon registration. With big ticket items like yachts and private jets, the Washington revenuers check up from time to time. With toilet paper from Costco? Never. But even if they did, it's not Costco's problem because it doesn't deliver.

The issue here is created by the delivery of the beds into Washington. At that point the nexus question rears its ugly head. Without knowing more about what Mattress World did and didn't do in Washington State, I could not draw a conclusion about how aggressive it was for it not to collect Washington sales tax. Certainly it should have expected that Washington State would try to tax sales into the state, but whether the state's position would pass the federal constitutional nexus tests in the Mattress World case is not 100% clear to me.

You wonder what the competitors are doing. If no one else in the industry is collecting the tax, a business that does so is not going to be attractive to customers.

Karma

As a small business owner I feel sad for the loss of this company. Since the recession hit it's been a struggle for all of us. Opening and running a small business is like giving birth to a child. I hope mattress world is able to regroup. I have never purchased a mattress from this store but I have watched the commercials supporting foster kids. They don't seem like such a bad company.


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