NRF Takes Aim at Sales Tax Loophole for E-tailers
The National Retail Federation is urging Congress to enact legislation that would close a loophole that allows e-commerce retailers to avoid collecting sales tax on items sold online.
H.R. 5660, introduced by Rep. Bill Delahunt (D–Mass.), is dubbed the “Main Street Fairness Act.”
Under the proposed bill, all states that have adopted the Streamlined Sales and Use Tax Agreement will be required to collect sales tax from out-of-state sellers whether they have a physical presence in the state or not. The Main Street Fairness Act would establish uniform definitions of what is and what is not a taxable item, set up mechanisms to facilitate collection of sales tax across state lines, and provide retailers with the tools to determine how much tax to charge.
The bill would be applicable to all “remote sellers,” including online retailers, catalog merchants, and “1-800” radio and television sellers. Overseeing implementation of the act is the Streamlined Sales Tax Governing Board, which would be allowed to determine an exemption level for small retailers.
The new bill is an attempt to get around the 1992 ruling in Quill v. North Dakota, in which the U.S. Supreme Court determined that retailers can collect sales tax from out-of-state customers only if the retailer has a physical presence such as a store, warehouse or office in the customer’s state.
“This bill would create a level playing field between online merchants and local stores while ensuring that state and local governments can collect the sales-tax revenue they need to support vital services like police and fire departments, ambulances, and schools,” NRF Vice President and Government and Industry Relations Counsel Maureen Riehl said in a statement released by the Washington, D.C.–based organization. “The merchandise sold online is no different than what is sold in a store. There is no reason one group of merchants should be given an unfair price advantage over another.”—Alison A. Nieder
