Posted on May 10, 2017
Small business and government groups are urging Congress to pass the Marketplace Fairness Act of 2017 – legislation recently introduced by Senators Mike Enzi. R-Wyo., Lamar Alexander, R-Tenn., Dick Durbin, D-Ill., and Heidi Heitkamp, D-N.D., that would give states the right to collect the state sales and use taxes that are already owed under current law from out-of-state businesses or online retailers.
The Marketplace Fairness Act of 2017 gives states the right to require that out-of-state businesses, such as those selling online or through catalogs, collect state sales taxes on purchases sold into their states. Currently, states are unable to collect these state taxes on purchases, so the tax is often not paid. According to the National Conference of State Legislatures, states lose $26 billion each year because of this online sales tax loophole. The state sales tax loophole also picks winners and losers because out-of-state retailers are treated differently than local brick-and-mortar businesses, creating a significant price disadvantage that hurts local businesses.
Senators Roy Blunt (R-Mo.), Jack Reed (D-R.I.), Sheldon Whitehouse (D-R.I.), Mark Warner (D-Va.), Ben Cardin (D-Md.), Tim Kaine (D-Va.), Edward Markey (D-Mass.), Tammy Duckworth (D-Ill.), Elizabeth Warren (D-Mass.), Mike Rounds (R-S.D.), Susan Collins (R-Maine), Al Franken (D-Minn.), Angus King (I-Maine), Dianne Feinstein (D-Ca.), Amy Klobuchar (D-Minn.) and Tammy Baldwin (D-Wis.) are also cosponsors of the legislation.
The following organizations are voicing their support:
National Governors Association, National Association of Counties, National League of Cities, U.S. Conference of Mayors, International City/County Management Association, National Conference of State Legislatures, and The Council of State Governments: "Our organizations have long supported remote sales tax legislation that would ensure collection of existing sales and use taxes and level the playing field between online and Main Street businesses. Without the ability to enforce existing sales and use taxes on remote purchases, states and local governments lose billions each year, which could be used to reduce other taxes and invest in infrastructure, education, public safety and other services that improve residents' quality of life."
Marketplace Fairness Coalition: “The reintroduction of bipartisan and bicameral E-Fairness legislation is an important step in the right direction to help American businesses and workers thrive and grow. For too long, congressional inaction has created an outdated, pre-internet online sales tax loophole that hurts Main Street job creators. Communities across America are forced to live with crumbling infrastructure and cannot hire teachers and first responders thanks to the lost revenue resulting from this loophole. It's time for Congress to bring our tax system into the 21st Century and pass federal E-Fairness legislation immediately."
Amazon: "Thank you to Sens. Alexander, Enzi, Durbin and Heitkamp for re-introducing the bipartisan Marketplace Fairness Act, a solution that would resolve the sales tax issue once and for all. We look forward to working with sponsors and supporters to get this long-considered and long-overdue legislation passed.”
Retail Industry Leaders Association: "The retail landscape has evolved dramatically in the last two decades, but our tax laws still reflect a 20th century marketplace. In 2017, requiring some businesses to collect taxes while giving others a free pass amounts to little more than a government subsidy. Giving every business a fair shot at the customer is what drives innovation and competition. It's time for Congress to restore basic free market principles and update our laws to align with the realities of modern commerce."
National Retail Federation: "With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue. The states know they can't fix this on their own, but they agree with retailers that Congress has stalled for far too long. Online sellers should not continue to receive an unfair price advantage."
American Supply Association: "The growth of e-commerce should benefit all sellers. The status quo, however, affords special treatment to 'remote sellers', distorting the marketplace and impeding the ability of local brick-and-mortar businesses to compete. In every state with a sales tax, brick-and-mortar sellers like our members have to collect sales taxes on the first dollar of sales. The Supreme Court held that only Congress has the authority to regulate interstate commerce. The patchwork of state and local sales tax rules is too complicated to require remote sellers to collect sales taxes, resulting in states and local government not easily enforcing existing sales and use tax laws on out-of-state sales. American businesses are in great position to meet consumer demand, regardless of the channel used for purchasing merchandise. But taxes should be applied equally to those purchases. Today's marketplace needs a modern sales tax collection system; we believe MFA helps accomplish this. The Marketplace Fairness Act of 2017 would balance economic parity with compliance and enforcement simplification, including free software. As well, we support efforts to provide robust audit and liability protection. It is time to level the playing field for all merchants. Congress should end once and for all the unfortunate pattern of picking winners and losers in the marketplace and pass S. 976."
International Council of Shopping Centers: “We are pleased that legislation was reintroduced in Congress this week to empower states to modernize their tax laws and provide parity to local businesses and the communities they serve. These important measures will fix an outdated tax loophole that currently gives online retailers a price advantage of up to 10 percent over brick-and-mortar stores, has shortchanged communities on much-needed sales tax revenue and overcomplicated our country’s current sales tax system."
National Sporting Goods Association: “For far too long, online-only retailers have enjoyed an unfair advantage by avoiding sales tax. I'm sure our brick and mortar sellers would like to enjoy the same advantage, but they're required to collect taxes. Our members do not fear competition, but unfair competition with this government sponsored favoritism is not good for our members, people who create jobs and support their communities in many ways. Now is the time for the House of Representatives to join the Senate in addressing this critical issue. We urge all fair-minded Americans to contact their Senators and Representatives and tell them how important it is to support these necessary bills. If Internet sellers shouldn't have to collect sales taxes, neither should brick and mortar."
Outdoor Industry Association: "Outdoor Industry Association applauds the re-introduction of e-fairness legislation in Congress. Specialty outdoor retailers have long been at a competitive disadvantage against online remote sellers who do not always collect sales tax. The Marketplace Fairness Act in the Senate and the Remote Transactions Parity Act in the House will level the playing field for all retailers in the industry, regardless of channel. OIA urges Congress to take up and pass e-fairness legislation as soon as possible."
For more information about the bill:
Click here for one-pager of the legislation.
Click here for a section-by-section of the legislation.
Click here for the full text of the legislation.