Thursday, February 14, 2013
Senators Unveil Bipartisan Online Sales Tax Bill to Help Local Businesses Compete
WASHINGTON, DC - In an effort to help local Main Street businesses compete more effectively against out-of-state Internet sellers and retailers, U.S. Senator Jack Reed (D-RI) today joined with a bipartisan group of 53 Senators and Representatives in introducing the Marketplace Fairness Act of 2013. This bipartisan and bicameral sales tax fairness legislation resolves the differences between bills introduced in the Senate and the House of Representatives last Congress and gives states the authority to decide what is best for their communities. The bill provides states the authority to enforce existing sales and use tax laws, if they choose to do so, but would exempt small businesses that earn less than $1 million annually from out-of-state sales.
“Rhode Island businesses and workers suffer from an unfair tax disparity that harms many local small businesses and benefits large out-of-state e-retailers. This bill would correct that inequity and help Main Street businesses compete. At a time when states like Rhode Island are struggling with their budgets, this bill would be a significant boost,” said Reed. “It has bipartisan support in Congress and broad support from both mom and pop shops and even large online retailers.”
Currently, remote retailers typically collect state and local sales tax only on goods ordered online and delivered to states where they have a physical presence. Some remote retailers voluntarily collect state and local sales tax at the time of purchase even if they don’t have a physical presence; however, many remote retailers do not. Most consumers are unaware of the legal requirement to pay sales tax on remote purchases and the potential penalties for failure to report.
Rhode Island Governor Lincoln Chafee has estimated that the state had to forgo $70 million in sales-tax revenue in fiscal year 2012 because of Internet sales.
“Many Rhode Island businesses have a hard time competing against out-of-state retailers because of outdated rules that require shops on Main Street to collect revenue, but not their out-of-state online competition. We have to address this tax inequity,” said Reed.
The effort to pass the Marketplace Fairness Act is being led by U.S. Senator Mike Enzi (R-WY), U.S. Senator Dick Durbin (D-IL), U.S. Senator Lamar Alexander (R-TN), U.S. Senator Reed, and U.S. Senator Tim Johnson (D-SD), who introduced the Marketplace Fairness Act in the Senate during the 112th Congress.
The effort in the U.S. House of Representatives is being led by U.S. Representatives Steve Womack (R-AR), Jackie Speier (D-CA), John Conyers, Jr. (D-MI), and Peter Welch (D-VT).
Summary: The Marketplace Fairness Act
The Marketplace Fairness Act would allow local Main Street retailers to compete on a level playing field against out-of-state Internet retailers, give states the ability to enforce their own sales and use tax laws reducing the need to raise taxes, and relieve consumers of the legal burden to report to state tax departments the sales taxes they owe on online purchases. This bill does not create new taxes or increase existing taxes.
The Supreme Court held in its 1992 Quill that only Congress has the authority to regulate interstate commerce under the Commerce Clause and the current maze of state and local sales tax rules is too complicated to require remote retailers to collect sales taxes. The result is that states and local governments are prohibited from enforcing existing sales and use tax laws on the growing number of out-of-state sales.
The Marketplace Fairness Act allows states and local governments, if they so choose, to enforce existing state and local sales and use tax laws if they simplify sales and use tax administration and collection and exempt small online retailers from collection requirements. The bill would level the playing field for Main Street businesses that are currently at a competitive disadvantage because they must collect sales and use taxes while a growing number of remote retailers do not. It would provide a pathway for states and localities across the country to collect an estimated $23 billion annually in uncollected tax revenue to balance their budgets by collecting taxes already owed instead of increasing taxes or cutting vital services.
Marketplace Fairness Act
The bill provides states the authority to enforce existing sales and use tax laws, if they choose to do so, by adopting one of the following options:
• Streamlined Sales and Use Tax Agreement (SSUTA): Allows any state that is a member of SSUTA to require remote retailers to collect state and local sales and use taxes.
• Alternative Minimum Simplification Requirements: States that are not SSUTA members may require remote retailers to collect state and local sales and use taxes if they adopt minimum simplification requirements as outlined in the bill.
Small Seller Exception: The legislation would prohibit states from requiring remote sellers with less than $1 million in annual nationwide remote sales to collect sales and use taxes.
The legislation does not create new taxes or increase existing taxes: Consumers already owe sales and use taxes on the goods they purchase. The legislation simply provides states the authority to enforce existing state and local sales and use tax laws and eliminates the competitive advantage currently enjoyed by remote retailers at the expense of local businesses.
The bill is supported by over 200 business, labor, and state and local government organizations including the National Governors’ Association, National Conference of State Legislatures, National Association of Counties, National League of Cities, Retail Industry Leaders Association, National Retail Federation, International Council of Shopping Centers, Amazon.com, and AFSCME.
Supporters of the Marketplace Fairness Act of 2013 include:
Acadia Realty Trust
Alabama College Bookstore Association
Alabama Retail Association
Alaska State Veterinary Medical Association
Alliance of Wisconsin Retailers
American Apparel and Footwear Association
American Booksellers Association
American Independent Business Alliance
American Specialty Toy Retailing Association
American Veterinary Medical Association
Arizona Retailers Association
Arkansas Grocers & Retail Merchants Association
Association for Christian Retail
Association of Washington Business
Barnes and Noble, Inc.
Bed, Bath, & Beyond, Inc.
Ben Bridge Jewelers
Best Buy Co., Inc.
Blake Hunt Ventures, Inc.
California Association of College Store
California Business Properties Association
California Retailers Association
California Veterinary Medical Association
Carolinas Food Industry Council
CBL & Associates Properties, Inc.
Cencor Realty Services
Certified Commercial Investment Member Institute
College Stores Association of North Carolina
Colorado Retail Council
Colorado Veterinary Medical Association
Connecticut Retail Merchants Association
Consumer Electronics Association
Consumer Electronics Retailers Coalition
David Hocker & Associates, Inc.
Delaware Veterinary Medical Association
Dick's Sporting Goods, Inc.
DLC Management Corp.
Donahue Schriber Realty Group
Economic Alliance Snohomish County
Evergreen Devco, Inc
Federal Realty Investment Trust
Florida Retail Federation
Food Marketing Institute
Footwear Distributors and Retailers of America
Garrison Pacific Properties
General Growth Properties
Georgia Association of College Stores
Georgia Retail Association
Georgia Veterinary Medical Association
Glimcher Realty Trust, Columbus, OH
Hart Realty Advisers, Inc.
Idaho Retailers Association
Idaho Veterinary Medical Association
Illinois Association of College Stores
Illinois Retail Merchants Association
Illinois State Veterinary Medical Association
Independent Running Retailer Association
Indiana Retail Council
Indiana Veterinary Medical Association
Institute of Real Management
International Council of Shopping Centers
International Downtown Association
International Economic Development Council
Iowa Retail Federation
Iowa Veterinary Medical Association
J.C. Penney Corporation, Inc.
Jewelers of America
Jo-Ann Stores, Inc.
Kemper Development Company
Kentucky Retail Federation
Kentucky Veterinary Medical Association
Kimco Realty Corporation
L. Michael Foley and Associates, LLC
Limited Brands, Inc.
Los Angeles Area Chamber of Commerce
Louisiana Retailers Association
Louisiana Veterinary Medical Association
Lowes Companies, Inc.
Maine Merchants Association
Maine Veterinary Medical Association
Malcolm Riley and Associates
Marketing Developments, Inc.
Marshall Music Co.
Maryland Retailers Association
Massachusetts Veterinary Medical Association
Michigan Association of College Stores
Michigan Retailers Association
Michigan Veterinary Medical Association
Middle Atlantic College Stores
Minnesota Retail Association
Minnesota Veterinary Medical Association
Missouri Retailers Association
Mountains and Plains Independent Booksellers Association
NAIOP, Commercial Real Estate Development Association
NAMM, National Association of Music Merchants
National Association of Chain Drug Stores
National Association of College Stores
National Association of Counties
National Association of Electrical Distributors
National Association of Real Estate Investment Trusts
National Association of Realtors
National Association of Wholesaler-Distributors
National Bicycle Dealers Association
National Conference of State Legislatures
National Governors Association
National Grocers Association
National Home Furnishings Association
National League of Cities
National Retail Federation
National School Supply and Equipment Association
National Sporting Goods Association
Nebraska Retail Federation
Nebraska Veterinary Medical Association
Nevada Veterinary Medical Association
New Atlantic Independent Booksellers Association
New England Independent Booksellers Association
New Jersey Retail Merchants Association
New Jersey Veterinary Medical Association
New Mexico Retail Association
North American Retail Dealers Association
North Carolina Retail Merchants Association
North Carolina Veterinary Medical Association
North Dakota Retail Association
Ohio Association of College Stores
Ohio Council of Retail Merchants
Oklahoma Veterinary Medical Association
Outdoor Industry Association (OIA)
Pacific Northwest Booksellers Association
Pennsylvania Retailers' Association
Pet Industry Joint Advisory Council
Petco Animal Supplies, Inc.
Professional Beauty Association
Real Estate Roundtable
Realtors Land Institute
REI (Recreational Equipment, Inc.)
Retail Association of Mississippi
Retail Association of Nevada
Retail Council of New York State
Retail Industry Leaders Association
Retail Merchants of Hawaii
Retailers Association of Massachusetts
Rhode Island Retail Federation
Rocky Mountain Skyline Bookstore Association
Sears Holdings Corporation
Seattle Metropolitan Chamber of Commerce
Simon Property Group
Soccer Dealer Association
Society of Industrial and Office Realtors
South Carolina Association of Veterinarians
South Carolina Retail Merchants Association
South Dakota Retailers Association
Southern Independent Booksellers Alliance
Southwest College Bookstore Association
Steiner + Associates LLC
Streamlined Sales Tax Governing Board
Tanger Factory Outlet Centers, Inc.
Taubman Realty Group
Tennessee Retail Association
Tennessee Veterinary Medical Association
Texas Retailers Association
The CortiGilchrist Partnership, llc
The Greeby Companies, Inc.
The Hocker Group
The Home Depot, Inc.
The Kroger Company
The Neiman Marcus Group, Inc
The Pratt Company
The Rappaport Companies
The Seayco Group
The Sembler Company
The Weitzman Group
Tractor Supply Company
Tri-State Bookstore Association
Utah Food Industry Association
Utah Retail Merchants Association
Utah Veterinary Medical Association
Vermont Retail Association
Virginia Retail Merchants Association
Virginia Veterinary Medical Association
Washington Retail Association
Washington State Veterinary Medical Association
WDP Partners, LLC
West Virginia Retailers Association
West Virginia Veterinary Medical Association
Western Development Corporation
Wisconsin Veterinary Medical Association
Wolfe Properties, LLC
World Floor Covering Association
Wyoming Retail Association
Wyoming Veterinary Medical Association