AIB Groups Urge Senate to Pass Marketplace & Internet Tax Fairness Act

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In a letter sent this week to every member of the U.S. Senate, AIB member organizations cheered the introduction of the Marketplace & Internet Tax Fairness Act and urged its passage.

The legislation, which authorizes states to pass legislation requiring internet and other remote retailers to collect sales tax, was introduced by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), Lamar Alexander (R-TN), Heidi Heitkamp (D-ND), Susan Collins (R-ME), and Mark Pryor (D-AR).   In order to take advantage of this new authority, states must simplify their sales tax rules and exempt small online retailers (under $1 million in annual sales) from collection requirements.

MITFA would level the playing field for independent brick-and-mortar businesses, which are currently operating at a 5-10 percent competitive disadvantage to online retailers that are not required to collect sales tax.

Last year, the Senate overwhelmingly passed the Marketplace Fairness Act (MFA). However, with little progress on the bill in the U.S. House of Representatives, MFA sponsors decided to add the e-fairness legislation to an extension of the Internet Tax Freedom Act, a law that prohibits states from levying taxes on Internet access, which is set to expire on November 1. This week, the House passed its own extension of the law, the Permanent Internet Freedom Act, which would extend the tax ban permanently.

The House bill does not include an internet sales tax provision.  If the MITFA passes the Senate, it will then have to be reconciled in conference committee with the House version of the bill.

MIFTA sponsor and long-time advocate for sales tax fairness, Sen. Durbin expressed concern about how the House would respond to MITFA. “The House is always a problem,” Durbin said, as reported by Roll Call. “We have tried repeatedly, repeatedly for meetings with House members to talk about finding common ground. They have canceled every meeting. So this is our approach. We want to join Marketplace Fairness with Internet Tax Freedom. I hope we can do that on the floor of the Senate and send it back to the House.”


AIB Letter to the U.S. Senate

Dear Senator:

On behalf of the Advocates for Independent Business (AIB), a coalition of 14 trade associations and other organizations that represent locally owned, independent businesses serving a consumer market, we are writing to express our strong support for the Marketplace and Internet Tax Fairness Act (MITFA). AIB’s member organizations collectively represent more than 100,000 small businesses that employ approximately 600,000 people and pay in excess of $10 billion in annual payroll.

MITFA allows states and local governments, if they so choose, to enforce existing state and local sales and use tax laws — so long as they simplify sales and use tax administration and collection, and exempt small online retailers from collection requirements. This bill would level the playing field for Main Street businesses that are currently working at a five percent to 10 percent competitive disadvantage versus remote retailers that are not collecting and remitting sales tax to states. MITFA would provide a pathway for states and localities across the country to collect an estimated $23 billion annually in uncollected tax revenue to balance their budgets by recouping taxes that are already owed.

It is crucial that sales tax fairness pass in this legislative session. Our member retailers simply cannot wait for another legislative session to address an issue that is critical for both small and large Main Street retailers alike.

Sales tax fairness would not institute a new tax, nor would it burden small businesses with extra tax paperwork. Instead, it would level the playing field. Main Street retail stores give back to their communities in ways that out-of-state retailers do not: We provide local jobs; we employ local services; we remit sales tax revenue that pays for roads and first responders, among other services. Yet the current system penalizes Main Street retailers by providing out-of-state e-commerce retailers with an unfair sales tax advantage.

Our member stores, and other retailers, should not have to face another holiday season without a solution to this problem. The time has come to act. The solution is clear, so let’s delay no longer. The failure to act will have a massive impact on the overall American economy, with the possible loss of many thousands of retail jobs.
Thank you for your consideration.

Sincerely,
Advocates for Independent Business:

  • American Booksellers Association
  • American Independent Business Alliance
  • American Specialty Toy Retailing Association
  • Independent Running Retailers Association
  • Independent We Stand
  • National Bicycle Dealers Association
  • North American Retail Hardware Association
  • Real Diaper Industry Association
  • Record Store Day
  • Soccer Dealer Association

 

2 Responses

  1. Steve Allen
    |

    Here’s the quandary for small, mom & pop stores like us. We also have a small eCommerce site where we do a few hundred dollars worth of business. We may make one sale per year to, say, Colorado. Does that mean we have to file a sales tax report in Colorado for a single small sale? And how will we know how much tax to charge? Just here in Georgia there are over 160 sales tax districts. I hope that if this does come to pass there will be a uniform tax rate and central place to file.

    • Stacy Mitchell
      |

      Steve,

      You won’t need to do anything under the proposed bill. The legislation only applies to businesses that do over $1 million in remote sales.

      For businesses over that size, the legislation includes a provision to certify software that handles the tax calculations and is updated regularly to reflect the various jurisdictions’ rates. Businesses that use certified software are exempt from liability in the event of mistakes.

      No one is interested in creating barriers for small businesses. What we want to do is ensure that large businesses that are perfectly capable of collecting sales tax nationally are liable for that collection just as brick-and-mortar businesses are.

      ~ Stacy