Congressman Jason Chaffetz (R-UT-3) and Congressman Steve Womack (R-AR-3) – along with a group of bipartisan lawmakers – today introduced the Remote Transaction Parity Act (RTPA; H.R. 2775), a bill that will modernize our nation’s outdated sales tax collection process. The legislation, which will be referred to the House Judiciary Committee because of its interstate commerce nexus, will promote state’s rights and bring sales tax parity between e-retailers and brick-and-mortar stores.
Upon introduction, Congressman Chaffetz and Congressman Womack released the following statements:
“A broad coalition of large and small businesses, online and brick and mortar retailers, as well as state and local governmental leaders asked Congress to modernize our nation's outdated sales tax collection systems. RTPA would modernize these systems and strike the appropriate balance between sales tax parity and states’ rights to manage sales tax policy within their borders. This bipartisan legislation was developed in an open and transparent process, with input from Republicans and Democrats, and stakeholders from all sides of the issue. I look forward to working with all members of the House and Senate to return more powers to the states and create parity within the retail community," said Chaffetz.
“The existing remote sales tax loophole has created the perception of the Internet as a duty-free marketplace and skewed the free market. Without Congressional action, it will stay that way, forcing more Main Street businesses to close their doors, further harming state and local services, and burdening consumers with the responsibility of filing their remote sales taxes. That is why I am proud to join Chairman Chaffetz to introduce the Remote Transaction Parity Act, which takes the Marketplace Fairness Act’s framework and adds much-needed protections and exemptions for small businesses. It is the most collaborative effort to date, and I urge its support,” said Womack.
The current tax loophole skews the free market. It allows businesses that employ fewer people and contribute to the economies of fewer states to avoid collecting sales taxes. This not only forces more brick-and-mortar stores to close their doors and lay off their employees, but also requires consumers to shoulder the burden and liability of the sales tax themselves – taxes that the consumer is by current law required to compute and pay as a part of their yearly taxes. The RTPA would close this loophole in a way that is generous to small remote sellers and puts our neighborhood retailers on a level playing field – without completely changing our current state sales and use tax structure.
RTPA includes significant audit protections for small businesses – and exempts businesses under $5 million in gross receipts from state audits entirely. Additionally, this legislation also exempts more small businesses from collection requirements in the first year – while the MFA only exempted businesses under $1 million in sales, the RTPA in the first year exempts small business under $10 million, phasing to $5 million in the second year and $1 million in the third. Finally, the RTPA calls for states to give remote sellers the software needed to collect and remit the taxes due. It also requires states to pay for set-up, installation, and maintenance costs on the software.
Lead cosponsors of this bill include: Representatives Steve Womack (R-AR-3), John Conyers (D-MI-13), Kristi Noem (R-SD-AL), Steve Stivers (R-OH-1), Peter Welch (D-VT-AL), Jackie Speier (D-CA-14), and Suzan DelBene (D-WA-1).
The full text of the bill can be found here, and a full list of supporters is available here.
Congressman Steve Womack has represented Arkansas’s Third Congressional District since 2011 and serves on the House Appropriations Defense, Financial Services and General Government, and Labor-Health and Human Services subcommittees and the House Committee on the Budget.