New online tax legislation proposed

Various forms of online sales tax legislation have been introduced in Congress over the past 15 years but none have won passage. And now there is a new proposal.



The new draft online sales tax legislation was released Thursday by House Judiciary Committee Chairman Robert Goodlatte. His proposal, The Online Sales Tax Simplification Act of 2016, is aimed at addressing disparity in sales tax collection obligations between Main Street retailers and online-only retailers. It would allow states that take certain steps to require online sellers to collect sales tax.



“Retailers are pleased that the process is advancing and we look forward to an open debate in the House aimed at ensuring that all retailers can compete on a level playing field,” said Joe Rinzel, senior VP for government affairs, the Retail Industry Leaders Association (RILA). “Retailers have worked earnestly with chairman Goodlatte for several years to resolve this issue. While retailers welcome today’s action by the Chairman to move the process forward, we will continue to press for changes that achieve true parity at the point-of-sale.”



“We hope this move will bring the attention needed to get Congress to move forward in treating purchases made online the same as those made in local stores when it comes to sales tax collection,” said NRF senior VP for government relations David French. “The price advantage held by online sellers when they don’t have to collect sales tax has resulted in the shuttering of bricks-and-mortar retail stores in almost every community across the nation over the last few years. That cannot be allowed to continue.”



Under a 1992 U.S. Supreme Court ruling, online sellers can only be required to collect sales tax in states where they have a physical presence such as their headquarters, stores, offices or warehouses. The court held that sales tax laws are too complicated for a seller in one state to know how much tax to collect from a buyer in another state.