NRF urges U.S. Senate committee to support legislation that would remedy 'tax collection discrimination' between brick-and-mortar, online retailers
April 25, 2012
– The National Retail Federation today urged a Senate committee examining federal tax reform to support legislation that would require Internet retailers to collect sales tax the same as local merchants.
“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,” NRF Senior Vice President for Government Relations David French said. “Brick-and-mortar retailers are major contributors to the health of local communities and should not be placed at a disadvantage compared to remote sellers that have no local presence.”
French’s comments came in written statement submitted to the Finance Committee, which is holding a hearing today on the impact federal tax reform could have on state and local tax and fiscal policy.
Of three bills pending in Congress that would give states authority to require out-of-state sellers to collect sales tax from their residents, French urged that Congress pass S. 1832, the Marketplace Fairness Act, sponsored by Senator Michael Enzi, R-Wyo. French praised the “hybrid structure” of the bill, which gives states who want to participate the choice of adopting the long-pending Streamlined Sales and Use Tax Agreement or a more limited set of simplifications included in the bill.
French noted that local retailers create jobs, pay state and local taxes. In addition to having to charge higher bottom-line prices because of sales tax, French said collecting the tax costs local stores administrative expenses averaging about 3 percent of the amount collected.
French said sales tax fairness legislation would not only level the playing field between retailers but also ease the burden on cash-strapped states that are currently losing an estimated $24 billion a year to untaxed purchases their residents make from out-of-state sellers. Recouping that revenue would help support essential local services such as teachers, police officers, firefighters and ambulance crews.
Online sellers are already required to collect sales tax from customers in their own states, but congressional action is needed because of a 1992 U.S. Supreme Court ruling. The court ruled in Quill v. North Dakota 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 court held that the 45 state and 7,600 local sales tax systems across the nation were too complicated for a retailer to otherwise know how much tax to collect.
As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s Retail Means Jobs campaign emphasizes the economic importance of retail and encourages policymakers to support a Jobs, Innovation and Consumer Value Agenda aimed at boosting economic growth and job creation. www.nrf.com