Talking Points –(With Details)
Main Street Fairness Act
Objective: To encourage members of Congress to co-sponsor/support a House and Senate version of legislation entitled, “The Main Street Fairness Act” that authorizes states to collect sales and use taxes on out-of-state sales.
(1) The Streamlined Sales and Use Tax Agreement substantially simplifies state and local sales tax systems, removes the burdens to interstate commerce that were of concern to the Supreme Court, and protects state sovereignty. In addition, the agreement “levels the playing field” between local and out-of-state merchants and benefits all retailers by reducing their administrative costs.
(2) The Agreement and state compliance to the Agreement removes the liability for mistakes in collection from the seller to the state. The liability for the collection of the correct sales tax rate rests with the state, sellers will be held harmless for calculations and collections using the certified technology.
(3) A recent national study commissioned by a partnership of business and government organizations, shows that the retailers cost of compliance burden to collect sales taxes averaged more than three percent of the sales tax collected, a $ 6.8 Billion annual cost to retailers at 2003 sales tax levels. For small retailers, between $150,000 and $1 million in sales, the compliance cost averaged 13.47 percent or about $2,400 per small retailer.
||Cost Per Total Sales Tax Collected
|| $2, 400
| $1M – $ 10 M
|| $5, 279
|$10 M +
(4) It is expected that implementation of the Streamlined Sales and Use Tax Agreement will reduce and overtime eliminate all cost of compliance burden on sellers to collect state and local sales taxes.
(5) It is estimated that in 2008, state and local governments lost at least $ 18 billion in uncollected sales taxes from out of state sales, with over $7.7 billion alone from online sales. As electronic commerce continues to grow so will the loss to state and local revenues. *
*“State and Local Sales Tax Revenue Losses from E-Commerce: Estimates as of April 2009” By Dr. Donald Bruce and Dr. William Fox, Center for Business and Economic Research, the University of Tennessee.
(6) Twenty-three states, representing over 30 per cent of the country’s population, have already been certified as being in compliance with the Streamlined Sales and Use Tax Agreement, which simplifies state sales tax systems and removes the burdens and costs of the current system imposed all sellers. The Agreement is operational in the following states: Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia and West Virginia. The Agreement will be operational in Wisconsin later this year.
(7) Since October 1, 2005, approximately 1,150 remote retailers have volunteered to collect out –of-state sales taxes for these states. To date member states have collected over $350 million in new sales tax revenues from these volunteer sellers, which previously would have been uncollected.
(8) The Streamlined Sales and Use Tax Interstate Agreement provides the states with a blueprint to create a simplified sales and use tax collection system that when implemented, allows justification for Congress to overturn the Bellas Hess and Quill Supreme Court decisions.
(9) This is not a new tax on Internet commerce, it merely provides states the mechanism to collect a tax on consumption already levied by the state but not collected. (The 1967 Bellas Hess case and the 1992 Quill v. North Dakota case—which acknowledged that consumers owe the sales tax when they purchase goods through catalogues or over the Internet, but ruled that states cannot force retailers to collect the tax.)
(10) According to NCSL April 2009 State Budget Report, states are facing a cumulative budget shortfall of nearly $103 billion for 2009, and estimates show that the budget gap for 2010 will be over $122 billion. Closing the loophole on sales tax collection, will provide the states with almost $18 billion in previously uncollected revenues and these revenues are not just a one-time addition but will be recurring annually.
(11) By passing the legislation, Congress would, in the words of Congressman Roy Blunt of Missouri, be providing “true fiscal relief for the states that does not cost the federal treasury a single cent.”
(12) The proposed legislation has the strong support of the communications industry, including the landline companies, the wireless industry, and cable providers as the legislation would require the sales tax simplifications be applied to the administration and collection of state and local taxes on communications transactions.