Lawmakers Fight for Online Sales Tax Collection

by Luke Jones  on Monday, Oct. 8, 2012 12:00 am  

From left, Jacob Cockcroft, Jean Cazort, a cutout of TV personality Stephen Colbert and David Cockcroft at Wordsworth Books & Co. (Photo by Michael Pirnique)

In a retail world into which the Internet is steadily encroaching, brick-and-mortar shops are fighting an increasingly bitter battle with their online rivals, but legislation introduced in Congress may represent some resolution.

The biggest battle is being fought over sales tax, which online retailers are rarely required to collect.

"Because of the technology of the iPhone, a consumer can literally walk into a store, ask questions, then make a purchase in front of them on their smartphone to avoid paying sales tax," said Jason Brewer, spokesman for the Retail Industry Leaders Association, which advocates on the issue. "Consumers still technically owe sales tax."

Robert Coon, who represents the Alliance for Main Street Fairness in Arkansas, said there's hope in two proposed federal measures, the Marketplace Equity Act and the Marketplace Fairness Act, both introduced in 2011.

The bills haven't been considered on the floor of Congress yet, Coon said, but they've received wide bipartisan support. The Equity Act was introduced by Arkansas Rep. Steve Womack, the Republican from Wal-Mart Stores Inc.'s home district, as well as Rep. Jackie Speier, a Democrat from California.

The bills have been gaining co-sponsors, including Arkansas Republicans Rep. Tim Griffin and Sen. John Boozman. Coon said co-sponsors had been joining even as recently as September.

"I think the House bill has more than 50 co-sponsors, both Republican and Democrat, and the Senate bill has more than 20," he said. "Both pieces of legislation are pretty similar, and they have gained some steam and momentum."

The bills, essentially, authorize each state to require online or out-of-state retailers to collect sales taxes. It's received bipartisan support thanks mainly to its giving each state an option, as opposed to a federal mandate like the Main Street Fairness Act, introduced in 2011 by Sen. Dick Durbin, D-Ill.

Brewer said Durbin's bill was "not under consideration" and has essentially been replaced by the two Marketplace bills.

"Durbin didn't give states options," Coon said. "Conservatives had issues, and even some Democrats had issues with the federal mandate approach."

 

Tax Ramifications

Still, things have slowed down in Congress during the election season.

 

 

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