Newsletter

October 14, 2011 - New Internet Sales Tax Bill Introduced as NRF Polling Shows Voters Want Action

A new bill intended to help level the playing field between online retailers and Main Street merchants on sales tax collection was introduced in Congress this week as NRF unveiled polling that shows consumer support for action on the issue.

H.R. 3179, the Marketplace Equity Act, was introduced on Thursday by Representative Steve Womack, R-Ark., with Representative Jackie Speier, D-Calif., as its lead co-sponsor. The legislation would allow states to “collect the taxes owed to them as they choose based on very basic guidelines” and would provide an exemption for small businesses.

“The nation’s retailers, both big and small, deserve to compete on a level playing field,” Womack said. “The intent of this legislation is … to close a long-standing loophole that puts America’s brick and mortar businesses at a competitive disadvantage.”

NRF, which has led the retail industry’s efforts for equal tax treatment of online and local stores for more than a decade, welcomed the legislation.

“Introduction of the Marketplace Equity Act focuses much-needed attention on tax fairness for all retailers,” NRF Senior Vice President for Government Relations David French said. “This bill is a step forward in NRF’s long-standing efforts to level the sales tax playing field between physical and online retailers, and helps move toward a federal legislative solution to this issue.”

Introduction of the bill came as NRF unveiled new polling results that show the majority of the public wants the sales tax issue addressed. Conducted by Purple Strategies for NRF, the survey found 83 percent support “a clearer approach that will simplify how sales tax is collected” while 70 percent believe current law hurts businesses and consumers by setting two different standards and 61 percent agree that current sales tax rules deny states critical revenue needed to pay for schools, police and firefighters.

“The initial data supports NRF’s contention that a fair and free marketplace should and deserves to be protected,” French said. “This is not about raising taxes or a new online sales tax, this is about treating every retailer – from big-box stores to online websites – the same, so competition is free and fair for all.”

The poll surveyed 800 likely 2012 voters nationwide by telephone October 3-8. The margin of error is plus or minus 3.5 percent.

The Womack-Speier legislation is the second bill on Internet sales tax collection introduced this year. The Main Street Fairness Act, introduced in July by Senate Majority Whip Richard Durbin, D-Ill., as S. 1452, and House Judiciary Committee Ranking Member John Conyers, D-Mich., as H.R. 2701, would allow states that have implemented a simplification pact known as the Streamlined Sales and Use Tax Agreement to require out-of-state sellers to collect sales tax.

States already have authority to require in-state Internet merchants to collect sales tax from their residents. But the U.S. Supreme Court ruled in 1992 that out-of-state sellers can be required to collect only if they have a physical presence – such as a store or distribution center – 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.

© 2011 National Retail Federation