The National Retail Federation (NRF) and nearly 100 retailers and trade associations are asking 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. "The states have made great progress," said NRF and the other groups in a letter to 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 tax while many online and catalog retailers are not," the letter said.
"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. This number 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 went to Sen. Mike Enzi, Republican from Wyoming, sponsor of the Senate version of the bill, S. 34, along with Rep. William Delahunt, Democrat from Massachusetts, the sponsor of the House bill, H.R. 3396, and cosponsor Rep. Ray LaHood, Republican from Illinois. A similar letter was sent to all members of the House and Senate.
Coalition members are hoping to see action 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.
Under the proposed legislation, 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 U.S. Supreme Court ruling that said 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 agreement went into effect on a voluntary basis in 2005 but passage of federal legislation is needed before sales tax collection can become mandatory. The letter to Congress noted that 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.
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.
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