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Washington Retail Insight

NRF Urges Senate Committee to Take Up Sales Tax Fairness

By Stephen E. Schatz
Washington Retail Insight
February 3, 2012

NRF and a broad array of more than 200 trade associations and individual companies this week urged the Senate Finance Committee to hold a hearing on legislation aimed at requiring Internet retailers to collect sales tax the same as local merchants.

“As the Congress seeks solutions to address the federal budget, the Marketplace Fairness Act is a proposal that will help states facing their own budget shortfalls without increasing the federal deficit,” the groups said in a letter sent to committee members on Wednesday. “Congress has an opportunity to enhance states’ rights over sales tax collection authority and in the process level the playing field for all merchants.”

The letter was signed by 38 national trade associations and 90 state-level associations, most representing retailers, along with 81 companies ranging from retailers to shopping mall owners. Included was Amazon, the online giant that has been the target of state-level Internet sales tax legislation across the country.

While states have attempted to legislate on the issue, the letter emphasized the need for federal legislation as the only way to overcome a 1992 U.S. Supreme Court ruling that states can only require out-of-state sellers to collect sales tax from their residents if they have a physical presence such as a store, office or warehouse in the customer’s state.

“While other bills have been introduced with similar goals, there is one key item in common: only Congress can grant this authority to the states,” the letter said.

The letter asked for action specifically on S. 1832, the Marketplace Fairness Act, sponsored by Senator Michael Enzi, R-Wyo., and a bipartisan group of colleagues. The Enzi bill was introduced last fall as a compromise between two other measures, the long-pending Main Street Fairness Act sponsored by Senate Majority Whip Richard Durbin, D-Ill., and Representative John Conyers, D-Mich., and the simpler Marketplace Equity Act sponsored by Representative Steve Womack, R-Ark. All three would require states to simplify their sales tax laws in order to require Internet sellers to collect.

NRF has led the retail industry’s fight for sales tax fairness, arguing that online retailers who don’t have to collect hold an unfair price advantage over local stores that do. NRF Senior Vice President for Government Relations David French told a House committee in November that the disparity is “stifling” local merchants’ ability to compete. The lack of collection also costs states an estimated $24 billion in sales tax revenue needed to fund essential services ranging from police to schools.

In addition to this week’s letter, NRF is urging retailers to contact Congress through an online action center at www.retailmeansjobs.com/salestaxfairness.

© 2012 National Retail Federation

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