WASHINGTON — Congress entered the protracted fray overimposing taxes on e-tailing once again on Friday and this time a mainopponent — Amazon.com — appears to be on its side.
Sen. DickDurbin (D., Ill.) introduced long-anticipated legislation Friday thatwould authorize 24 states to require all Internet retailers to collecttax on online sales.
The debate over taxing Web sales has takenplace in Washington for more than a decade without any resolution, butbrick-and-mortar retailers are hoping this is the year Congress willact.
In a stunning twist, Amazon.com, which has battled statesagainst a sales tax requirement and threatened to sever businesspartnerships, said in a letter to Durbin that it supports hislegislation and has always supported a “simple, nationwide system ofstate and local sales tax collection, evenhandedly applied to allsellers, no matter their business model, location or level of remotesales.”
Paul Misener, Amazon’s vice president of global publicpolicy, in the letter, a copy of which was provided by Durbin’s office,said, “Introduction of your bill returns the discussion of interstatecollection of sale tax to Congress, which the Supreme Court says is theappropriate forum to resolve the issue.”
Sears Holdings Corp.also supports Durbin’s bill.
A movement by several states inrecent months backing legislation requiring online sellers to collectsales taxes could also provide the impetus needed on Capitol Hill. Mostrecently, California Gov. Jerry Brown signed legislation in late Junethat requires out-of-state Internet companies to collect sales taxes andremit them to the state.
The U.S. Supreme Court ruled in a 1992case, Quill Corp. v. North Dakota, that retailers are required tocollect sales tax from out-of-state customers only if they have a“physical presence” in the customer’s state.
Durbin’s bill,dubbed the Main Street Fairness Act, would authorize states that haveadopted the Streamlined Sales & Use Tax Agreement of 1999 —developed to simplify sales tax laws in response to the Supreme Courtdecision — to require out-of-state sellers to collect sales taxregardless of whether they have a physical presence or not. The billwould cover Internet-only sellers as well as “remote sellers,” such ascatalogue companies.
Durbin’s office said 24 states have changedtheir laws to comply with the Streamlined Sales & Use TaxAgreement, but the Quill decision directed Congress to sanction theagreement.
Traditional retailers are backing federal legislationand a national standard requiring e-tailers to collect sales taxes,arguing they are put at a competitive disadvantage alongside smallretailers when consumers choose Internet-only Web sites over storesbecause of the added cost of sales tax.
“We believe there shouldbe a level playing field where all retailers follow the same rulesregardless of whether they sell their merchandise in a brick-and-mortarstore, through the mail or online,” said David French, senior vicepresident of government relations at the National Retail Federation.“This bill would end a situation where Internet sellers have had anunfair price advantage over local stores for far too long. Tax policyshould be channel neutral and not favor one segment of an industry overanother.”
Durbin’s bill exempts small businesses, as defined bythe governing board of the Streamlined Sales & Use Tax Agreement,and compensates retailers for any startup administrative costsassociated with collecting sales taxes.