Association leaders applaud senators for "standing with retailers"
May 8, 2013 - The U.S. Senate Monday approved the Marketplace Fairness Act, which would allow states to collect sales tax from remote sellers (online and catalog retailers operating from another state).
The bill passed by a vote of 69 to 27 and will now move to the House.
Retail industry groups were quick to weigh in with responses to yesterday's vote.
The Retail Industry Leaders Association's senior vp for government affairs, Bill Hughes, said "The Senate's overwhelmingly bipartisan passage of this legislation foreshadows the end of the special treatment of big online businesses at the expense of retailers on Main Street. For too long the Main Street retailers that are an integral part of their communities have faced tax rules that put them at a disadvantage to their out of state, online-only competitors. The Senate has voted to ensure that the market, not government, determines winners and losers. We are confident the House will reach the same conclusion."
The National Retail Federation's president and CEO, Matthew Shay, said, "We applaud Senators Enzi, Durbin, Alexander and Heitkamp and the entire U.S. Senate for standing with local retailers and America's small business owners in a strong, bi-partisan vote for final passage of the Marketplace Fairness Act, despite a highly-funded misinformation campaign by the legislation's opposition."
NRF Chairman of the Board Stephen I. Sadove of Saks Inc., said, "The retail industry - the largest private sector employer - is rapidly changing and evolving. Retailers compete for customers on many different levels, distribution channels and fronts, including service and selection, but they cannot compete on sales tax."
Currently, states can only collect sales tax from internet retailers that have a physical presence in the state. This is based on the rulings of two Supreme Court decisions from 1967 and 1992 - long before internet commerce, or even the internet, was a part of everyday life.
As the Marketplace Fairness Act is currently written, participation by states would be voluntary. The legislation would prohibit states from requiring remote sellers with less than $1 million in annual nationwide remote sales to collect the sales tax. States -- not retailers -- would pay for the software that would handle collection.
States that choose to participate would have to simplify their sales tax codes, and the Act specifies two ways to do that.
The state may choose a "comprehensive simplification plan," called the Streamlined Sales and Use Tax Agreement, in which they could require remote sellers (except small sellers as defined earlier) to collect sales tax starting on the first day of the calendar quarter that is at least 90 days after the date of the enactment of the Marketplace Fairness Act. On this date (which some say could be as early as Oct. 1, 2013), sales tax collection would be required on all sales shipped to the 24 SSUTA states: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.
The remaining states that want to collect sales tax must enact legislation to implement either the SSUTA , or implement the "minimum simplification requirements" described in the Act, which include: providing retailers with at least 90 days' notice of any rate changes within the state; designating a single state organization to handle sales tax registrations, filings and audits; establishment of a uniform sales tax base; using the destination of the sold goods to determine sales tax rates for out-of-state purchases; and providing free software for managing sales tax compliance.
The states that choose the second option (the "minimum simplification requirements") can begin requiring remote sellers to collect sales tax six months after the date of enactment.
The bill's authors say enactment of the Marketplace Fairness Act 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.
The Marketplace Fairness Act 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.
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