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Congress considers new bill on online sales tax

Retailers both online and off are coming together in support of recently introduced legislation that allows states to charge sales tax from out-of-state sellers whether or not they have a physical presence in the state, reported WWD.

After a more than 10-year fight, Washington has apparently solved the debate concerning Web sales tax, and Neiman Marcus Group and Amazon – known for its previous opposition to collecting online sales taxes – are some of the many merchants backing this new legislative solution.

“It is a win-win resolution,” Paul Misener, vice president of global policy at Amazon, wrote in a letter to the bill’s sponsors, said WWD. “If enacted, your bill will allow states to require out-of-state retailers to collect sales tax at the time of purchase and remit those taxes on behalf of customers, and it will facilitate collection on behalf of third-party sellers. Thus, your bill will allow states to obtain additional revenue without new taxes or federal spending, and will make it easy for consumers and small retailers to comply with state sales tax laws.”

Introduced by Sens. Dick Durbin (D., Ill.), Mike Enzi (R., Wyo.) and Lamar Alexander (R., Tenn), the bill has attracted 10 co-sponsors, plus received letters of support from Best Buy, the National Retail Federation, Retail Industry Leaders Association, International Council of Shopping Centers and Jewelers of America, said Enzi.

The legislation, hailed as the “Marketplace Fairness Act,” would streamline the current system, offering states two alternatives to gather sales taxes from online and catalogue purchases. In the first choice, states can ink the Streamlined Sales & Use Tax Agreement of 1999, which declared that merchants are obliged to collect sales from out-of-state consumers only if they possess a “physical presence” in the consumer’s state.

Fully 24 states have altered their laws on taxation and adopted the agreement, necessitating out-of-state merchants to collect sales tax whether they do or do not have a physical presence in the state.

However, some states are dragging their heels. Under the new bill, these states have a second alternative: to collect sales tax only if they agree to certain minimum simplification requirements and supply retailers with notices concerning these collection conditions.

David French, senior vice president of government relations at the NRF, maintained the two-pronged strategy offered by the new bill is a “game changer” that will help drive the legislation’s passage in Congress. Legislation presented by Durbin in July basically only embraced states who sign the Streamlined Sales & Use Tax Agreement. Thus far, 21 states have failed to sign that agreement.

Tagged in: online, web, tax, law, internet, legislation, sales tax, bill, congress, tax collection,

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