The City Wire
Michael Tilley
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U.S. Rep. Steve Womack, R-Rogers, teamed up with Democratic Congressman Jackie Speier on Wednesday (Oct. 12) to announce the push of legislation that would give states more authority to require online retailers to collect and remit sales taxes.

The proposed legislation, the Marketplace Equity Act of 2011, requires states to establish some minimum requirements, such as creating a “blended” single rate that is simple for online retailers to calculate, or providing the necessary software to allow calculation of tax owed based on a purchase within a taxing district.

Other state requirements include:

• Six months prior to the beginning of collection, states must publish a public notice about the legislation, detailing how to comply with the collection requirement and which businesses are exempt; and,
• State authority ends if a court determines the state is no longer in compliance and the decision is no longer subject to appeal.

Brick and mortar business owners around the country have complained for years that online retailers were able to undercut prices because they aren’t required to collect and remit sales taxes. Discount online retail giants like Amazon.com or Overstock.com don't currently collect sales tax on items sold. They contend that customers are obligated to make the payments voluntarily. The large online retailers also allege that large retailers like Wal-Mart are using the fairness issue as a way to reduce competition from online retailers.

Sen. Jake Files, R-Fort Smith, sought to resolve the issue with SB 738. The bill, approved by the Arkansas General Assembly and signed into law by Gov. Mike Beebe, closed a loophole in tax law and requires online retailers to collect and remit taxes.

Files and other supporters of the law have taken heat from Tea Party activists and some Republicans who say the law was nothing more than a veiled tax hike. They also say the Arkansas law and similar laws in other states represent state governments trying to greedily extend their tax code to the Internet.

Files, supported by the Alliance for Main Street Fairness, has said business owners in Arkansas with a physical storefront who aren’t given an out on sales tax avoidance and neither should online retailers.

Womack agrees with that sentiment.

“At the end of the day, I’ve got to have some passion for these bricks and mortar stores, especially the small business owners, who have invested their life savings in their business but now face a tremendously unlevel playing field,” Womack told The City Wire in an interview earlier this week.

Womack said he realizes the Tea Party will condemn him for filing the legislation.

“Sure, they’ll come after me on this, just like they did Jake (Sen. Files). ... But one of these days, we’ll look up and all our stores are going to be gone. I don’t think that’s healthy for our country,” Womack said.

Updated info: Tod Cohen, Vice President for Government Relations and Deputy General Counsel at eBay Inc., made the following statement upon the introduction of the ‘Marketplace Equity Act.
“At a time when our economy faces continued challenges with economic growth and jobs, Congress should reject this proposal to expand Internet Sales Taxes because it will hurt entrepreneurial small business retailers and kill jobs. Better policy is proposed by Congressman Dan Lungren (R-CA), Congresswoman Zoe Lofgren (D-CA), and 30 cosponsors that reject new Internet tax burdens on small businesses with their bipartisan resolution, H.Res. 95.

“Treating small business retailers the same as national retail businesses with physical facilities across the country is bad tax policy, is unfair, and will unbalance the playing field between giant retailers and small business retailers on the Internet. Any legislation on this issue needs to exempt small business retailers from new sales tax burdens.”

Representatives with The Alliance for Main Street Fairness attended the Womack-Speier press conference in Washington. Included in the group was Craig Underwood of Underwood's Fine Jewelers of Fayetteville, and Gary Taylor, co-owner of Go!Running of Little Rock.

"I'm grateful that Rep. Womack is working to solve this important issue," Underwood said in a statement provided by the Alliance. "Local retailers contribute to their communities by creating jobs, supporting local causes, and paying property and sales taxes. All we are asking is for everyone to play by the same rules."