RETAILERS OPPOSE INTERNET TAX BILL
Byline: Kristi Ellis
WASHINGTON — Retail trade groups came out in opposition to a House bill introduced Tuesday, which calls for extending a moratorium on Internet service taxes, like access fees, and clarifying business activities taxes, set to expire Oct. 21.
Although retailers generally have supported an extension of the moratorium, the trade groups weighed in Monday against the measure — introduced by Reps. Bob Goodlatte (R., Va.) and Rick Boucher (D., Va.) — because it does not provide for taxing retail sales on the Internet. Supporters of an Internet sales tax want the complex issue to be part of any bill making a moratorium on Internet service taxes, like access fees, permanent.
Congress is currently debating whether to allow states to enter into a voluntary compact enabling the collection of Internet sales taxes. “In any bill that would extend the moratorium, or make it permanent, we want the issue of Internet sales tax collection addressed,” said Lisa Wolski, counsel for tax and finance at the International Mass Retail Association. “There are some folks who say if a company doesn’t have a physical presence in a state, it should not be made to collect taxes for that jurisdiction,” Wolski acknowledged, but added: “Our opinion is that these are taxes due by the consumer, and it’s more efficient to require retailers to collect them.”
IMRA is also lobbying for full compensation for the costs retailers incur in collecting Internet sales taxes. “Current tax policy favors one retail segment over another,” said Sarah Whitaker, senior director of government relations at the National Retail Federation, in referring to catalog and Internet merchants. “This bill does nothing to address it.”
The National Retail Federation also favors development of a system to collect online sales tax — as long as Congress simplifies the 7,600 state and local sales tax jurisdictions and clarifies product definitions. “The retail industry generally supports one tax rate per state,” Whitaker said. She added, however, “If the technology exists, there can be multiple rates per state.”
Not surprisingly, some of Goodlatte’s biggest PAC contributions during the 1999-2000 election cycle came from telecommunications and Internet companies, including donations of $10,000 a piece from Verizon Communications and SBC Communications, two of the Congressman’s top four contributors; He also recieved $9,000 from Microsoft Corp., and $5,500 from the Direct Marketing Association, which came out in support of the new measure Tuesday.
In a related development, Frank Julian, Federated Department Stores’ operating vice president, who also serves as chairman of the Direct Marketing Association’s Use Tax Committee, reiterated his push Tuesday for simplification of state tax systems before they’re allowed to collect Internet sales tax. Federated collects $1 billion annually in sales taxes from its stores and pays “tens of millions” of dollars collecting those taxes, he noted.
“It is not an issue of whether taxes are legally due-they are,” Julian said. “This is all about tax collection and tax collection burdens.”