Retailers Urge Congress to Reject Customs Bill If Without Online Sales Tax

The National Retail Federation today called on Congress to reject a customs reauthorization bill set for a vote this week unless it includes a provision allowing states to require online merchants to collect sales tax the same as local stores.

“As more and more Main Street retailers close their doors because they cannot compete, it is time for Congress to remove the sales tax advantage for Internet sellers that is harming our communities,” NRF Senior Vice President David French said. “We need a level playing field so retailers can compete without the government advantaging one sector of the industry over the other.”

French’s comments came in a letter to House Speaker Paul Ryan, R-Wisc., and Senate Majority Leader Mitch McConnell, R-Ky., and all members of both chambers.

The final House-Senate agreement on the Trade Facilitation and Trade Enforcement Act of 2015 is scheduled for a vote in the House on Friday. The measure includes a provision that would make permanent the Internet Tax Freedom Act, a federal ban on Internet access taxes that is set to expire on Friday.

While ITFA has nothing to do with customs, the extension is considered “must-pass” legislation because state and local governments would be free to start taxing online access if it is not renewed. Backers of sales tax fairness legislation are opposed to the stand-alone extension of ITFA, however, because they hoped to use ITFA as a vehicle for passage of the Remote Transactions Parity Act, which would effectively overturn a 1992 U.S. Supreme Court ruling that allows sales tax on most online purchases to go uncollected.

“We are extremely concerned about the inclusion of the Permanent Internet Tax Freedom Act in the final conference report,” French said. “Retailers have long believed that it is appropriate to eliminate the sales tax discrimination for bricks-and-mortar stores as part of congressional consideration of PITFA.”

Various forms of the sales tax bill have been pending in Congress for more than a dozen years, but French said the need for passage is becoming urgent, citing an NRF survey that found more people shopped online than in stores during Thanksgiving weekend for the first time this year.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation.

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