Sens. Mike Enzi (R-WY), Dick Durbin (D-IL) and Lamar Alexander (R-TN) have offered an updated version of the Marketplace Fairness Act as an amendment to the Small Business Jobs and Tax Relief Act. The move follows a flurry of activity in states such as New Jersey, Virginia and Texas that have taken steps to level the retail playing field for their local retailers.
The Marketplace Fairness Act would do the following:
• Give states the right to decide to collect – or not to collect – taxes that are already owed.
• Simplify the country’s more than 9,000 diverse sales tax jurisdictions and provide two voluntary options by which states could begin collecting sales taxes from online and catalog purchases.
• It would not tax the Internet or Internet services. Rather than raise taxes, it would close a sales tax loophole that local and Main Street retailers say puts them at a disadvantage.
• Exempts businesses with less than $500,000 in annual online or out-of-state sales from collection requirements.
“If Congress fails to authorize states to collect tax on remote sales, and electronic commerce continues to grow, we are implicitly blessing a situation where states will be forced to raise other taxes—such as income or property taxes—to offset the growing loss of sales tax revenue,” said Enzi. “We do not want this to happen.”
The Marketplace Fairness Act is characterized as bipartisan legislation supported by Republican and Democrat governors, state legislators, and local officials nationwide. Supporters say it could provide $23 billion in local fiscal relief at a time when state budgets are hurting and federal funding has dried up.
Enzi, Sens. Dick Durbin, D-Ill., and Lamar Alexander, R-Tenn., filed the bill as an amendment to S. 2337, the Small Business Jobs and Tax Relief Act now being considered on the Senate floor.
The retail industry voiced support through various groups.
“States have sent a bi-partisan message to Washington that it’s time to end special treatment for online-only retailers and close the sales tax loophole,”said Katherine Lugar, executive vice president for public affairs at the Retail Industry Leaders Association. “Nothing is more important to the retail community than a level playing field devoid of government picking winners and losers with the tax code.”
The National Retail Federation (NRF) launched a nationwide campaign in May to raise awareness of the sales tax fairness issue, and Enzi told retailers at NRF’s Washington Leadership Conference that he hopes to see legislation passed this year.
The House Judiciary Committee is expected to hold a legislative hearing on companion legislation, H.R. 3179, the Marketplace Equity Act, sponsored by Representatives Steve Womack (R-AR) and Jackie Speier (D-CA) on July 24th.