Articles
Online sales tax bill splits communityBy MICHELLE QUINN
Washington,
October 13, 2011
A new online sales tax bill is splitting the business community: Brick-and-mortar retailers say it would end an unfair leg up for Internet shopping sites, but online retailers such as eBay argue that it would be a big drag on small businesses.
POLITICO Dubbed the Marketplace Equity Act, the bill sponsored by Reps. Jackie Speier (D-Calif.) and Steve Womack (R-Ark.) would give states authority to compel online retailers to collect sales tax. The bill differs from the Main Street Fairness Act, an online sales tax bill introduced over the summer by Sen. Dick Durbin (D-Ill.), in that it would give states flexibility in how they craft their tax systems to conform with the law. That’s something some state tax officials such as Betty Yee, a member of California’s Board of Equalization, approve of. It is “especially helpful to diverse states such as California because it allows California and all other states to retain the ability to enact tax laws and policies that meet their own needs,” Yee said. Under the new bill, from one of three options, including one based on a buyer’s address as long as the state provides software to online retailers. Womack and Speier “have taken a strong first step toward closing the sales tax loophole with bipartisan legislation that gives all states the tools they need to treat all retailers equally,” said Katherine Lugar, an executive vice president at the Retail Industry Leaders Association. Much like the Main Street Fairness Act, the bill faces opposition from tech industry groups. Ed Black, president and chief executive of the Computer & Communications Industry Association, and Julie Coons, president and chief executive of the Electronic Retailing Association, both issued statements Wednesday criticizing the new bill. “New regulatory burdens and draconian cost increases would significantly damage both the marketplace and the consumers who rely on it,” Coons said. Amazon has supported the Durbin bill and an Amazon spokeswoman said the company is reviewing the new bill. “We support enactment of federal legislation, and expect several bills to be introduced,” she said. The Main Street Fairness Act would give states that streamline their taxes as part of an effort called the Steamlined Sales Tax Project the authority to compel retailers to collect taxes online. Both bills carve out an exemption for small sellers. Under the Womack-Speier measure, a state has to exempt a firm from collecting sales tax if the firm has either less than $1 million in annual sales or has $100,000 or less in sales in the state in question. The Durbin bill does not specify an exemption but allows the threshold to be set by the Streamlined Sales Tax Project’s governing board. But some critics of the bills say the exemptions would not spare small online retailers whose sales are low and couldn’t handle the extra burden of collecting sales tax. Brian Bieron, eBay’s director of government relations, said that “both of the Internet sales tax bills introduced in this Congress fall far short of protecting small business retailers based on existing small business definitions as well as” those in previous Internet sales tax bills. Steve DelBianco, executive director of NetChoice, said that the “anemic small business exception in this bill is no help to thousands of small and midsized employers who depend on Internet sales to compete.” Durbin, for his part, “is committed to leveling the playing field for Main Street businesses and welcomes all proposals from the House and Senate — including the proposal from Representatives Womack and Speier — into that discussion,” a spokeswoman for the senator said. |