Executive Briefings

Retailers Welcome Online Sales Tax Push

The National Retail Federation recently welcomed renewed efforts in Congress to require online sellers to collect sales tax the same as local stores.

"With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue," said David French, NRF senior vice president for government affairs. "The states know they can't fix this on their own, but they agree with retailers that Congress has stalled for far too long. Online sellers should not continue to receive an unfair price advantage."

Senator Michael Enzi, R-Wyo., reintroduced the Marketplace Fairness Act, legislation that passed the Senate in 2013 but never received a vote in the House. In the meantime, Representative Kristi Noem, R-S.D., reintroduced a House version that had also been delayed, the Remote Transactions Parity Act.

The two measures vary in details but both would allow states to require out-of-state sellers to collect sales tax regardless of whether they have a physical presence in a customer’s state. Under a 1992 U.S. Supreme Court ruling, out-of-state sellers can be required to collect only if they have a physical presence such as a store, warehouse or office.

Various bills that would effectively overturn the Supreme Court ruling have been introduced in Congress over the past 15 years but none have won final passage. In the past two years, several states have passed or considered legislation requiring collection nonetheless, with some acknowledging that the ruling leaves them without authority to do so but saying they want to prompt Congress to act or the Supreme Court to reconsider the issue. States and local governments lose close to $25bn a year because of untaxed online sales.

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"With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue," said David French, NRF senior vice president for government affairs. "The states know they can't fix this on their own, but they agree with retailers that Congress has stalled for far too long. Online sellers should not continue to receive an unfair price advantage."

Senator Michael Enzi, R-Wyo., reintroduced the Marketplace Fairness Act, legislation that passed the Senate in 2013 but never received a vote in the House. In the meantime, Representative Kristi Noem, R-S.D., reintroduced a House version that had also been delayed, the Remote Transactions Parity Act.

The two measures vary in details but both would allow states to require out-of-state sellers to collect sales tax regardless of whether they have a physical presence in a customer’s state. Under a 1992 U.S. Supreme Court ruling, out-of-state sellers can be required to collect only if they have a physical presence such as a store, warehouse or office.

Various bills that would effectively overturn the Supreme Court ruling have been introduced in Congress over the past 15 years but none have won final passage. In the past two years, several states have passed or considered legislation requiring collection nonetheless, with some acknowledging that the ruling leaves them without authority to do so but saying they want to prompt Congress to act or the Supreme Court to reconsider the issue. States and local governments lose close to $25bn a year because of untaxed online sales.

Read Full Article