NRF urges approval of online sales tax bill

WASHINGTON The National Retail Federation announced that it, along with nearly 100 retailers and trade associations have sent a letter to Congress asking them to approve legislation making it easier to require Internet merchants, mail-order houses and other “remote sellers” to collect sales tax across state lines.

“Brick-and-mortar retailers are currently required to collect sales taxes while many on-line 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.”

According to NRF, the letter was signed by 98 members of the Sales Tax Simplification Coalition, which 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 Senator Mike Enzi, R-Wyo., sponsor of the Senate version of the bill, S. 34, along with Representative William Delahunt, D-Mass., the sponsor of the House bill, H.R. 3396, and co-sponsor Representative Ray LaHood, R-Ill. The NRF said a similar letter will go to all members of the House and Senate next week.

Coalition members are hoping to see action this fall 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. 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.