WASHINGTON — Internet retailers have an unfair advantage over Main Street merchants when it comes to sales tax, and legislation may be the solution to help level the playing field, according to the National Retail Federation.
In written testimony submitted to a House Judiciary Committee hearing on sales tax fairness legislation, NRF SVP government relations David French said a "sales tax collection discrimination" exists between brick-and-mortar and remote retailers due to a 1992 Supreme Court ruling, which declared that retailers are required to collect sales tax from out-of-state customers only if they have a physical presence, such as a store, warehouse or office in the customer’s state.
The committee is scheduled to examine constitutional limitations on states’ ability to require out-of-state sellers to collect tax on sales made to their residents, NRF said.
“Sales tax fairness requires all sellers, whether brick and mortar or remote, to collect sales taxes, but only after the states have simplified their collection requirements,” French said. “NRF urges the committee to enact sales tax collection reform that will level the playing field between brick and mortar and remote sellers by granting states the authority to collect sales taxes from all sellers regardless of their distribution method.”
French also added that cash-strapped states are losing an estimated $24 billion each year to untaxed online purchases.
In related news, Amazon VP global public policy Paul Misener also submitted testimony to the House Judiciary Committee on the matter, saying that "Congress — and only Congress — may, should, and feasibly can authorize the states to require out-of-state sellers to collect the sales tax already owed."
"Congress should authorize the states to require collection, with the great objects of protecting states’ rights, addressing the states’ needs, and leveling the playing field for all sellers," Misener told the committee. "States’ rights should be protected. States need the freedom to make their own revenue policy choices. Fairness among sellers should be created and maintained. Sellers should compete on a level playing field. Congress should not exempt too many sellers from collection, for these sellers will obtain a lasting un-level playing field versus Main Street and other retailers. Congress should rectify the current imbalance and avoid a future imbalance."