Senators Try Back-Door Play to Gain Passage of the Marketplace Fairness Act

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House Judiciary Committee Chairman Bob Goodlatte (R-VA) is on record as insisting that the controversial  Marketplace Fairness Act (MFA)—which would allow state taxation of remote Internet and catalog sales—go through “regular order” and be vetted by committees an public hearings. But when Goodlatte's committee passed a permanent extension of the Internet Tax Freedom Act (ITFA) this week, Senators Dick Durbin (D-IL) and Mike Enzi (R-WY) introduced a bill that would attach MFA to ITFA and force its passage as a ride-along measure. Insiders say that Senate Majority Leader Harry Reid might bring the combined bill to a vote before the Senate as early as next week.

The Senate passed MFA by a 69-27 vote in May 2013. The bill is currently stalled in the House.

The True Simplification of Taxation Coalition (TruST)  reacted immediately to the news yesterday by firing off letters to Reid and Senate Minority Leader Mitch McConnell, arguing that connecting the two measures does disservice to both bills. The ITFA bans taxing consumers for broadband Internet usage.

“The House of Representatives approved a clean, non-controversial  ITFA renewal that would continue to protect Americans from unfair and discriminatory Internet taxes,” read the letter.” We urge the Senate to take up this measure, and allow the robust and productive House debate over the MFA to take place under normal order.”

Marketing industry groups belonging to TruST feel that MFA places unfair burdens on catalog and Internet retailers and their customers by making them comply with collection requirements—and possible audits—by more than 46 states and 10,000 tax jurisdictions. They're pushing for legislation that simplifies the measure with common taxation and judicial review standards.

A back-door passage of MFA would be “a massive change for tens of thousands of American companies,” said Peggy Hudson, SVP of governmental affairs at the Direct Marketing Association. “This bill should undergo the full consideration of regular order so we don't put thousands of businesses out of business.”

As majority leader, Reid has the power to bring any bill to the floor for a vote, though it is doubtful he will do so with this one unless he's assured that he has a majority of votes in its favor. Aside from powerful brick-and-mortar retail lobbies and state government officials who support MFA's passage, part of Reid's motivation in introducing the bill would be to help honor the legislative legacy of longtime colleague Durbin, who has announced his retirement from the Senate.

Hamilton Davison, executive director and president of the American Catalog Mailers Association, urged all catalogers and direct mailers who have close relationships with their senators to contact them immediately to protest Durbin's and Enzi's ploy.

“It really is disheartening to see the House making such significant progress in correcting the deficiencies in the Marketplace Fairness Act and then have the Senate try to pass it in the dead of night,” Davison said.

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