Congress pushes for online sales tax
HTT Staff -- Home Textiles Today, 2/15/2013 12:07:31 PM
Washington, D.C. - A group in congress is once again introducing a bill that would allow states to collect sales tax from internet retailers.
Introduced on Thursday, sponsors of the Marketplace Fairness Act of 2013 include more than 50 U.S. senators and representatives. The 11-page bill is at least the third effort in recent years to pass an online sales tax collection measure.
Many businesses believe online retailers have an unfair competitive advantage since they aren't required to collect state and local sales taxes, since they don't share the same costs and offer incentives like free shipping.
Some major online retailers buckled in recent years and agreed to start collecting the taxes at a future date.
A press release from the office of U.S. Rep. Steve Womack (R-AR) said the current bill resolves the differences between recent bills in both houses of congress.
It would give states the option to require collection of sales and use taxes already owed under state law by out-of-state businesses. Currently, consumers are required to remit those taxes, but much of the time they go unreported and uncollected.
Currently, brick-and-mortar retailers collect those taxes from customers who make purchases in their stores. Many online and catalog retailers do not collect the same taxes.
Two rules govern the current online retail approach to sales tax.
In 1967, the Supreme Court ruled in National Bellas Hess v. Department of Revenue that mail order resellers needed to have physical contact with a state - other than mail - to be required to collect state sales tax.
In Quill Corp. v. North Dakota, the Supreme Court in 1992 ruled that a business must have a physical presence in a state to collect, but said Congress could overturn the decision by legislating the parameters of state taxation.
It was unclear at press time whether like previous efforts the bill would exempt small sellers - businesses with less than $500,000 in remote sales.
"Small businesses and states alike are suffering from the inability to collect due - not new - taxes from purchases made online," Womack said in the release.
"The Marketplace Fairness Act is the bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses rather than continuing to allow the government to pick marketplace winners and losers."