Three prominent trade groups have strong opinions on H.R. 3179 – which would allow states to require online retailers to collect sales tax – and will come before the House Judiciary Committee on Tuesday.
If it passes, the Marketplace Equity Act would repeal the 1992 Supreme Court decision, Quill Corp. vs. North Dakota, which said states are not allowed to require out-of-state companies to collect sales taxes unless that company has a physical presence, such as a store or warehouse, in the state.
Hamilton Davison, the president and executive director of the ACMA, sent an email on Wednesday urging membership to submit letters opposing the bill that he can present to the House Judiciary Committee. Davison said in an email to his members that ACMA needs at least 30 letters sent.
In his email, Davison said there’s a good chance Congress will pass the Marketplace Equity Act with little opposition. Davison referred to H.R. 3179 as a “freight train” that would place a burdensome new requirement on all remote marketers.
The ACMA opposes the Marketplace Equity Act because it views it as taxation without representation; most catalog companies have no need or use of these states’ services and infrastructure; and they’re responsible to remit sales tax whether or not they collect. The group also believes the country’s tax system is not set up to logistically accommodate such a change.
There are more than 9,600 different taxing jurisdictions around the country and, in many cases, it would be impossible for catalog marketers to ensure their customers are paying their proper tax amount. To be forced to include a list of more than 9,600 different tax rates on an order form would be impossible, resulting in mass consumer confusion.
Jerry Cerasale, the DMA’s senior vice president, government affairs, said his group has asked members to write to the chairman of the House Judiciary Committee (U.S. Rep. Lamar Smith, R-TX) explaining the administrative burden this forced tax collection would present for companies.
Cerasale said the bill would grant states authority to conscript non-citizen businesses to become their tax collectors.
“These efforts are not federal tax reform and they are not state tax reform. They represent states asking Congress to impose a 1930’s tax regime on 21st century commerce rather than reforming their tax regimes,” Cerasale said in an email. “The bright-line physical presence test in Quill Corp. vs. North Dakota should remain for collection of sales and use taxes without significant simplification reform of state sales tax regimes. The burden of each on interstate commerce is large, and this is a time when our economy can ill afford such a burden.”
Meanwhile, the NRF says it supports the Marketplace Equity Act.
“The introduction of the Marketplace Equity Act focuses much-needed attention on tax fairness for all retailers,” NRF Senior Vice President of Government Relations David French said in an October 2011 press release. “This bill is a step forward in NRF’s long-standing efforts to level the sales tax playing field between physical and online retailers, and helps move toward a federal legislative solution to this issue.”
Allowing all retailers to play by the same tax rules, rather than giving one group of retailers an unfair advantage over another, is sound public policy, French added.
The NRF has actively shown its support of the Marketplace Equity Act on Twitter.