Democrats Propose Bill to Collect SalesTax from Online Retailers

By Erin Harrison August 02, 2011

Democrats’ proposed federal bill to collect state sales tax from online retailers is being met with criticism by some organization that say the law would place an unnecessary financial burden on small businesses.

But lawmakers say the bill would allow local Main Street retailers to compete more effectively against out-of-state Internet sellers. During its second quarter earnings call last week, online retail giant Amazon praised the legislation, which has failed pass in Congress a number of times.

 “I think in terms of the sales tax issue in total, the way you should think about it, we support a federal simplified approach, as we have for more than 10 years,” Thomas J. Szkutak, the company’s chief financial officer, told analysts during the company’s second-quarter earnings call, PC Mag reported.

The Main Street Fairness Act – proposed late last week in the Senate and the House – is co-sponsored by co-sponsored by Sen. Dick Durbin (D-IL), Sen. Tim Johnson (D-SD), and Sen. Jack Reed (D-RI) as well as Reps. John Conyers (D-MI), Peter Welch (D-VT) and Heath Schuler (D-NC) in the House.

Mounting state budget deficits are leading elected officials to search for new revenue sources and the growth in online retailing make it a particularly lucrative target.

In a statement issued July 29, Durbin said US states will lose an estimated $24 billion in 2012 because of uncollected sales taxes from Internet and catalog sales.

“The Main Street Fairness Act doesn’t ask anyone to pay a single penny more in taxes,” he said. “Instead, it would help governors and mayors collect taxes that are already owed.”

In a letter to Durbin, (News - Alert), Inc.’s Vice President for Global Public Policy Paul Misener said: “ has long supported a simple, nationwide system of state and local sales tax collection, evenhandedly applied to all sellers, no matter their business model, location, or level of remote sales.  To this end, I am writing to thank you for your bill that would allow states that sufficiently simplify their rules to require collection of sales tax by out-of-state sellers.”

According to Durbin, the legislation would:

  • Certify the Streamlined Sales and Use Tax Agreement;
  • Provide states who choose to use it with the clear authority to require retailers to collect sales taxes already owed;
  • Require the Streamlines Sales and Use Tax Agreement to meet a lengthy list of simplification requirements to ease administrative burdens for sellers;
  • Exempt small businesses (as defined by the Governing Board of the Agreement) from collecting sales taxes;
  • Compensate retailers for startup administrative costs associated with collecting sales taxes;
  • Treat all retailers equally regarding sales tax collection;
  • Release consumers from their existing sales tax remittance obligations; and
  • Help states and localities collect billions in taxes that are already owed.

Groups opposing the bill, among others, are: Computer and Communications Industry Association, the Information Technology Industry Council (ITI), and NetCoalition, a trade group counting Google (News - Alert) and Yahoo among its members, PC World reported.

Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Rich Steeves

Executive Editor, Strategic Initiatives

Related Articles

The World is His Oyster: Connected Solutions Enable Daniel Ward to See Food

By: Paula Bernier    3/16/2018

Fresh seafood can taste great, but if it is not handled properly, people can get sick, and that can lead to business closures and lost revenues. That'…

Read More

How to Get Ready for GDPR if You've Waited Until the Last Minute

By: Special Guest    3/14/2018

With less than two months until the General Data Protection Regulations (GDPR) deadline, many companies have already started making sure that their bu…

Read More

How Fintech is Helping Create Global Businesses

By: Special Guest    3/14/2018

The growth of Fintech probably has not escaped your attention. Whether you're a customer making contactless payments or an investor weighing up CFD tr…

Read More

Are We Prepared for Automation?

By: Special Guest    3/13/2018

We are barreling toward a future of automation. A great proportion of the six million US manufacturing jobs that have disappeared over the last few de…

Read More

The Dark Web - A Hot Bed for Cybercrime

By: Special Guest    3/12/2018

There is a corner of the internet that is cloaked from every day users. Beneath the typical search engines and web browsers, an illegal marketplace is…

Read More