WASHINGTON — The National Retail Federation is urging Congress to pass legislation that would require online and remote sellers to collect state and local sales taxes, telling a House committee that lawmakers should level the playing field between local retailers and out-of-state competitors. David French, SVP of the NRF, told the House Judiciary Committee in a letter that legislation is needed to end the sales tax disparity.
While brick-and-mortar merchants are required to collect state and local sales taxes on most items, many out-of-state sellers are not required to do so, giving them what the NRF says is an unfair price and market advantage of as much as 10%. The committee is scheduled to hold a hearing on the issue Wednesday, March 12.
NRF urged the committee to consider online sales tax legislation, based on principles outlined last fall by Chairman Bob Goodlatte, R-Va., that recognizes compliance costs, eliminates the current patchwork of state laws and court decisions, and simplifies the collection process. Under the U.S. Supreme Court’s 1992 Quill ruling, online retailers are required to collect sales tax only in states where they have a physical presence, such as a headquarters, store, office or warehouse. Federal legislation passed in the Senate last year would provide states the ability to require sales tax collection.
“Members of the National Retail Federation believe that Congress must resolve the constitutional questions posed by the Quill decision in a fashion that promotes a level playing field between retail competitors,” French said. “As retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that Congress address the sales tax collection discrimination that exists between brick-and-mortar and remote retailers.”