The movement to collect sales and use taxes on online purchases continues with a renewed push. Earlier this month, Senator Michael Enzi (R-WY) introduced S. 336 and Rep. Steve Womack (R-AR) introduced H.R. 684. Both bills, which typically are referred to as the Marketplace Fairness Act of 2013, have attracted multiple sponsors. The Senate bill boasts 19, while the House bill has 36.
According to Marketplacefairness.org, the legislation grants states the authority to compel online and catalog retailers (AKA remote sellers), no matter where they are located, to collect sales tax at the time of a transaction, just as local retailers are already required to do. However, states are only granted this authority after they have simplified their sales tax laws.
The states can do this in one of two ways: they can adopt the Streamlined Sales and Use Tax Agreement (SSUTA), which already has been adopted by 24 states. Or, states can meet five simplification mandates required by the bill, including notifying retailers in advance of any rate changes; designating a single state organization to handle sales tax registrations, filings and audits; and establishing a uniform sales tax base throughout the state.
The bills also have captured support from more than 150 professional, policy and trade groups, including a few surprises. Among them, according to marketplacefairness.org: the National League of Cities, the American Conservative Union, the National Governors Association, the National Association of Chain Drug Stores, and the International Council of Shopping Centers.
In a letter supporting the bill, Al Cardenas, chair of the American Conservative Union, wrote, “A robust free-market system requires a level playing field, where the government doesn’t get to pick winners and losers in the marketplace. Senator Enzi and Congressman Womack deserve praise for their efforts to empower states to make their own revenue policy choices and create a fair system of tax collection.”
Some 80-plus companies also have indicated that they support the bill, also according to marketplacefairness.org. Many of the companies have some stake in bricks-and-mortar retail, including Bed, Bath & Beyond and Foot Locker. In addition, Amazon.com also appears on the list.
To be sure, the bills still face significant hurdles. A number of groups and businesses, including eBay, the National Taxpayers Union and the Heritage Foundation, have said they oppose the legislation. Steven Tisch, an analyst with the Reason Foundation, wrote this in August 2012: “In seeking to close what it disingenuously calls a ‘loophole’ that allows Internet sales to remain tax-free, it (the legislation) bulldozes a vital element of commerce law that protects consumers from taxation from other jurisdictions.
However, as the Alliance for Main Street, a coalition of businesses, points out, “Those making the purchases owe these taxes to their state and local governments, where they are represented by the state legislators, governors, city and county commissioners, mayors, and other officials they elect. This is the very opposite of ‘no taxation without representation,’ and is completely consistent with our Founder’s vision. Collecting these taxes online is no different from doing so at a local mall.”
Both the Senate and House bills were referred to Committee.<