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Internet Sales Tax Hearing Offers Suggestions To Even The Playing Field

The U.S. House Judiciary Committee listened to testimony about the Marketplace Fairness Act in a hearing titled “Exploring Alternative Solutions on the Internet Sales Tax Issue”.  Committee Chairman Bob Goodlatte (R. Va) kicked off the hearing by saying, “The tax is already owed, but the public still views the bill as Congress taxing the Internet.”

All of the 6 people called to testify at the hearing mentioned the need for an Internet sales tax.  But three were strongly against the Marketplace Fairness Act, which passed in the Senate last year, but never came to a vote in the U.S. House. They argued that the Act placed too many burdens on online retailers when it came collecting the tax, asked that the taxing structure be changed to tax the buyer’s  location instead of the seller’s, or complained that the there are too many local taxes to determine the correct amount to tax, leaving online retailers open to extensive and expensive audits.

But those in favor of the Marketplace Fairness Act, which includes NAED and hundreds of other associations, responded to those concerns at the hearing.

Here are some of the quotes from Wednesday’s testimony.

Joseph Crosby, MultiState Associates and advisor to the retail industry

“Some have asked why there is urgency to address this issue. There is urgency because retailers who have invested in your communities are at a severe disadvantage to those who have not because of government policies. The urgency is about government picking winners and losers in the marketplace which results in actual job losses in your districts. There is urgency because state and local governments do not have the luxury of borrowing to balance budgets or of time to kick problems down the road.

This is not about retailers with outdated business models not wanting to compete. This is about businesses that have made investments in your communities and their inability to compete on a level playing field in terms of tax policy with their online only counterparts who have not made a similar investment. It is not about state and local governments asking for new revenue. It is about elected state and local leaders who have made tough decisions to reform their sales tax systems but are hamstrung in their efforts by Congressional inaction. It is not about protecting consumers who, knowingly or not, evade tax laws. It is about easing the tax compliance burden on your constituents who make an honest effort to fulfill their duty as citizens and pay taxes they legally owe.”

William Moschella   – Simon Property Group

“The Simon Property Group fully supports the Marketplace Fairness act passed by the Senate.  Simon Property is a member of the Marketplace Fairness Coalition, the International Council of Shopping Center, and the National Association of Real Estate Investment Trusts, all of which support the Marketplace Fairness Act. The Marketplace Fairness Act is a well-considered, bi-partisan proposal which enjoys the support of a wide coalition, including Governors, brick and mortar retailers and Internet based retailers.  However, when Chairman Goodlatte indicated concerns with the Senate passed version of the Marketplace Fairness Act, Simon Properties endeavored to find other approaches that could address those concerns and still achieve the fundamental purpose of the Marketplace Fairness Act. If other effective ways to address the inequity in the current system can be supported by the vast stakeholders in this matter, Simon Properties will help lead the effort to forge consensus and move it forward.  We offer our idea to be constructive and to assist the Committee as it considers remedies for a problem that most agree must be solved.  In that spirit, Simon thanks the Chairman for calling this hearing to explore alternatives, and we are pleased to discuss an idea we think can satisfy the principles the Chairman released in 2013.”

Andrew Moylan  R Street Institute

“S. 743, the Marketplace Fairness Act, is detrimental to the interests of taxpayers, businesses and sound tax policy. There are other ways, like uniform origin-based sourcing, to address this matter without trampling on vital pro-taxpayer checks and balances and without burdening interstate commerce by foisting unworkable schemes on remote sellers. Simply treating remote sales in the same way that we already treat brick-and-mortar sales would level the playing field in an honest way. While the policy points away from the MFA and in the direction of origin sourcing, it is worth mentioning the politics of the issue do much the same.”

Steven Kranz  — McDermott Will & Emery

Congress can create a framework designed to ensure that remote sellers have the information and certified commercial software needed to comply with all states’ sales tax laws, thus keeping the burden of tax compliance from being placed on consumers. Despite what some have argued, the technology and software that is available today offers remote sellers the ability to collect and remit sales and use taxes in an efficient, seamless manner. I applaud the principles issued by the Chair that provide guidance related to the imposition of tax on remote sales. Those principles outline a path for Congress to create a workable framework for collection of sales tax. By acting to establish a framework, Congress can ensure not only that state laws as applied to remote sellers do not become overly complicated, but also that states are required to give remote sellers the tools they need to comply with those laws. A framework is needed. A framework that provides certainty to business, consumers, and the states. A framework that relies on state-provided information, certified commercial software, and protections for business. A framework that preserves state sovereignty. And, perhaps most important, a framework that protects the American economy and American jobs. All of these are achievable, and only by Congress.”

 

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