The US National Retail Federation and nearly 100 retailers and trade associations
are urging Congress to approve legislation making it easier to require internet
merchants, mail-order houses and other “remote sellers” to collect
sales tax across state lines.
Coalition members are hoping to see action this fall on the Sales Tax Fairness
and Simplification Act, which is pending in both the House and Senate. The measure
would allow states that have implemented the Streamlined Sales and Use Tax Agreement
to require that out-of-state merchants collect sales tax on merchandise sold
to residents of their states.
Retailers would be compensated for the cost of sales tax collection, and collection
could be outsourced to certified service providers. Retailers with less than
$5 million in annual gross remote sales would be exempt.
The Streamlined Sales and Use Tax Agreement, which simplifies sales tax law
and creates a mechanism for collection and distribution across state lines,
was developed in 2002 in response to a 1992 US Supreme Court ruling which stated that
remote sellers could only be required to collect sales tax from customers in
states where they have a physical presence. With more than 7,600 state and local
jurisdictions collecting sales tax – many with different rates, different
lists of taxable items and different definitions – the court held that
out-of-state merchants could not be expected to know what to collect.
“The states have made great progress,” NRF and the other groups
said in a letter to the sponsors of the legislation. “We now call on Congress
to respond to their efforts by passing this legislation.”
“Brick-and-mortar retailers are currently required to collect sales taxes
while many on-line and catalog retailers are not,” the letter added. “This
is not only fundamentally unfair to Main Street retailers, but it is costing
states and localities billions in lost revenue. This further threatens vital
public services including health care, education and public safety.”
The letter was signed by 98 members of the Sales Tax Simplification Coalition,
which includes individual retailers, along with NRF, a number of state retail
trade associations, and other associations representing retail segments such
as book stores, convenience stores, college stores and shopping centers.
The letter was sent to Senator Mike Enzi (R-Wyo.), sponsor of the Senate version
of the bill, along with Representative William Delahunt (D-Mass.), the sponsor
of the House bill, and co-sponsor Representative Ray LaHood (R-Ill.) A similar
letter will go to all members of the House and Senate this week.
While the Streamlined Sales and Use Tax Agreement went into effect on a voluntary basis in 2005, the coalition
says that passage of federal legislation is needed before sales tax collection
can become mandatory. Thus far, 22 states have passed legislation implementing
the agreement. In addition, more than 1,000 companies have participated in the
agreement voluntarily, and have collected more than $125 million in state and
local sales tax that would otherwise have gone unpaid.
The NRF helped draft the Streamlined Sales and Use Tax Agreement, and has long
argued that remote sellers enjoy an unfair price advantage in situations where
they are not required to collect sales tax. The NRF wants a level playing field
where all retailers are subject to the same tax rules when their merchandise
is sold from a store, through a catalog or over the internet.
The National Retail Federation is the world's largest retail trade association,
with membership that comprises all retail formats and channels of distribution
including department, specialty, discount, catalog, Internet, independent stores,
chain restaurants, drug stores and grocery stores.
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