WASHINGTON, D.C. — Today, Congressman Jason Chaffetz and a group of bipartisan lawmakers introduced H.R. 2775, the Remote Transactions Parity Act (RTPA), a bill that will modernize our nation’s outdated sales tax collection process. The legislation, which will be referred to the House Judiciary Committee because of its interstate commerce nexus, will promote states’ rights, and bring sales tax parity to e-retailers and brick-and-mortar stores.
Lead cosponsors of this bill include: Reps. Steve Womack (R-AR), John Conyers (D-MI), Jackie Speier (D-CA), Kristi Noem (R-SD), Steve Stivers (R-OH), Peter Welch (D-VT), and Suzan Delbene (D-WA).
“A broad coalition of large and small businesses, online and brick-and-mortar retailers, and state and local government leaders asked Congress to modernize our nation’s outdated sales tax collection framework. RTPA would modernize current law and strike the appropriate balance between sales tax parity and a state’s right to manage tax policy within its borders. This bipartisan legislation was developed as part of an open and transparent process, with input from stakeholders on all sides of the issue. I look forward to working with all Members of the House and Senate to return more power to the states and create parity within the retail community.”
The current tax loophole skews the free market. It allows businesses that employ fewer people and contribute to the economies of fewer states to avoid collecting sales taxes. This not only forces more brick-and-mortar stores to close their doors and lay off their employees, but also requires consumers to shoulder the burden and liability of the sales tax themselves – taxes that the consumer is by current law required to compute and pay as a part of their yearly taxes. The RTPA would close this loophole in a way that is generous to small remote sellers and puts our neighborhood retailers on a level playing field – without completely changing our current state sales and use tax structure.
RTPA includes significant audit protections for small businesses and, except in the case of intentional misrepresentation or fraud, exempts businesses under $5 million in gross receipts from remote state audits entirely.
Additionally, this legislation also exempts more small businesses from collection requirements in the first year – while the MFA only exempted businesses under $1 million in sales, the RTPA in the first year exempts small business under $10 million, phasing to $5 million in the second year and $1 million in the third.
Finally, the RTPA calls for states to give remote sellers the software needed to collect and remit the taxes due. It also requires states to pay for set-up, installation, and maintenance costs on the software.
Additional cosponsors include Lou Barletta (R-PA), Scott Rigell (R-VA), Renee Ellmers (R-NC), Carlos Curbelo (R-FL), Robert Dold (R-IL), Ted Deutch (D-PA), John Larson (D-CT), and Derek Kilmer (D-WA).
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