Fairness Act deals tax blow to online retailers

The apparent advantage online retailers have over their brick-and-mortar counterparts may soon be gone now that new legislation seeking to enforce the collection of sales tax for all retailers has been introduced.

Introduced by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), Lamar Alexander (R-TN) and Heidi Heitkamp (D-SD), and Representatives Steve Womack (R-AR), Jackie Speier (D-CA), Peter Welch (D-VT) and John Conyers (D-MI), the Marketplace Fairness Act gives states the power to force online and catalog sellers to collect sales tax at the time of a transaction, no matter where they are located.

The National Retail Federation, Retail Industry Leaders Association and Consumer Electronics Association were among those in the industry to come out in support of the act.

“For far too long local retailers and small business owners have been saddled with a competitive disadvantage with online retailers - sales taxes,” NRF SVP government relations, David French said. “While store owners collect and remit state and local sales taxes their digital competitors are off the hook – and benefiting because of it.”

“This sales tax disparity hinders community-based retailers, hurts Main Street jobs, and has lead to a $24 billion loss for state and local governments,” French said. “As e-commerce and m-commerce continue to increase in market share, it’s time Congress allows all retailers to compete on the same playing field.”

Joining NRF in its quest to advance the Marketplace Fairness Act is RILA, which encouraged Congress to make passing the act a priority for 2013.

RILA Executive Vice President for Public Affairs Katherine Lugar

"The retail industry has always been fiercely competitive with merchants competing every day for consumer dollars based on price, value, services and other factors. But today, Main Street merchants compete on a playing field that has been skewed against them due to a loophole that allows online-only retailers to evade collecting state sales taxes. This practice has given these sellers a perceived price advantage of up to ten percent, a competitive edge that results in government policy picking winners and losers in the free market."

.

The CEA also praised the U.S. Congress for introducing legislation to establish sales tax fairness.

“We commend congressional leadership for their commitment to enact legislation that will require all retailers to collect owed sales taxes. Today, brick and mortar retailers must collect owed sales and use taxes, while Internet retailers do so only in limited circumstances. As state budgets are hurting, forcing layoffs of essential public safety employees, now is the time to give states the ability to collect this much needed, and legally due, source of revenue. We urge Congress to act quickly and enact this vital legislation,” said Gary Shapiro, president and CEO of the Consumer Electronics Association.