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NRF Urges Action on Bill Closing Internet Sales Tax Loophole

For Immediate Release
Contact: J. Craig Shearman (202) 626-8134

NRF Urges Action on Bill Closing Internet Sales Tax Loophole

WASHINGTON, July 29, 2010 – The National Retail Federation today urged Congress to move quickly on legislation that would make it easier for states to require Internet retailers and other out-of-state merchants to collect sales tax the same as local bricks-and-mortar stores.

“This bill would create a level playing field between online merchants and local stores while ensuring that state and local governments can collect the sales tax revenue they need to support vital services like police and fire departments, ambulances and schools,” NRF Vice President and Government and Industry Relations Counsel Maureen Riehl said. “The merchandise sold online is no different than what is sold in a store. There is no reason one group of merchants should be given an unfair price advantage over another.”

Riehl was among supporters on hand today when Representative Bill Delahunt, D-Mass., held a Capitol Hill news conference to call for action on H.R. 5660, the Main Street Fairness Act, which Delahunt introduced earlier this month.

Under 1992’s Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are required to collect sales tax from out-of-state customers only if they have a physical presence such as a store, warehouse or office in the customer’s state. The court held that the 45 state and 7,600 local sales tax systems across the nation were too complicated for a retailer to otherwise know how much tax to collect.

Delahunt’s bill would allow states that have adopted the Streamlined Sales and Use Tax Agreement to require out-of-state sellers to collect sales tax whether they have a physical presence or not. The agreement was developed to simplify sales tax laws in response to the Supreme Court ruling and has been adopted by 24 states since 2005. The pact establishes uniform definitions of taxable items, sets up mechanisms to facilitate collection and distribution of sales tax across state lines, and provides retailers with software and free databases to tell them how much tax to charge.

The bill would cover all “remote sellers,” which include online retailers, catalog merchants and “1-800” offers on radio and television. The Streamlined Sales Tax Governing Board, which overseas the simplification agreement, would be allowed to determine an exemption level for small retailers and levels at which all retailers – both online and traditional – would be reimbursed for the costs of collecting sales tax.

As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad. In the United States, NRF represents the breadth and diversity of an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2009 sales of $2.3 trillion. www.nrf.com