WASHINGTON, D.C.–At a meeting held yesterday to discuss the future of e-commerce legislation, U.S. House Judiciary Committee Chairman Bob Goodlatte (R-Va.) expressed support for addressing the issue, saying that it is “an issue I believe needs to be addressed.”
The Marketplace Fairness Act, which would allow states to require remote retailers to collect and remit state sales taxes, passed the U.S. Senate with strong bipartisan backing and is supported by the White House. New legislation on the same topic will soon be considered by the House Judiciary Committee.
“We’re very pleased by the leadership Chairman Goodlatte is showing on this important and bipartisan issue,” said Neal Osten, director of the National Conference of State Legislatures’ (NCSL) Washington, D.C. office. “Today’s meeting was a step in the right direction, and we look forward to continuing to work with Chairman Goodlatte to ensure that states’ voices are heard.”
During the meeting on Capitol Hill, Chairman Goodlatte presented a set of principles outlining his priorities for the legislation. The seven principles are listed below.
NCSL is a long-time champion of e-fairness legislation and encourages the House to act. In 2012 alone, it was estimated states lost out on a collective $23 billion as a result of not being able to collect sales tax revenue on remote sales.
Contrary to some claims, online sales tax collection is not a new tax. The sales taxes at issue are already legally owed, but unless a remote seller has a physical presence in the state where the item is being purchased, the remote seller is not currently required to collect and remit the sales taxes. E-fairness legislation fixes this tax avoidance problem and allows states to require remote sellers to collect sales taxes.
Basic Principles on Remote Sales Tax from Chairman Goodlatte
- Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.
- Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
- No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.
- Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.
- Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
- States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.
- Privacy Rights – Sensitive customer data must be protected.
NCSL is a bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.