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Chances That Senate’s Marketplace Fairness Act Passes House? Remote

Brick-and-mortar retailers that in April celebrated the Senate’s passing of a law requiring remote sellers to pay local taxes will have to keep the champagne on ice. The Marketplace Fairness Act (MFA) faces a rough road in the House.

In late July Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee that has purview over the bill, was denying reports he said it was “dead on arrival” in the lower house. Still, he issued a statement indicating he has problems with the proposed law, which would require catalog and online retail customers to pay the sales tax of the states in which they reside.

“I do not believe the Marketplace Fairness Act is sufficiently simplified yet,” Goodlatte’s statement said. “There is still not uniformity on definitions and tax rates, so businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions. The Committee will also look at alternatives that could enable states to collect sales tax revenues without opening the door to aggressive state action against out-of-state companies.”

Remote sellers are heartened by the rigor being applied to the measure by Goodlatte, who is on record as saying he wants the bill to go through “regular order,” meaning that it will be vetted in committee and a public hearing before being introduced for a vote. “We anticipate that the Congressman will issue a series of guiding principles sometime this fall to restart the conversation, principles that we’re very hopeful will focus on creating a sustainable system,” says Hamilton Davison, president and executive director of the American Catalog Mailers Association (ACMA).

Remote sellers have been urging their Congressional representatives to consider their constituents before rubber-stamping the Senate’s proposals. Online merchant Louis Giesler, president of AmeriMark Direct, which sells products via Web and mail order, charges that the politicians don’t realize the large number of citizens who stand to be hurt by the MFA.

“We have a lot of customers in remote areas and a lot of older customers who continue to use the mail. Some of them can’t get to retail stores, and many of the products we sell, you can’t find at retail stores,” contends Giesler, who says mail orders account for 35% of his business. “They like to order by mail and receive their purchases in the mail, and it’s next to impossible for them to figure out the sales tax and send it to me.”

Constituent concerns figure to present the biggest roadblock to MFA—but concerns with healthcare, not sales taxes. “The Friday before summer recess, the House racked up its 40th vote on healthcare reform,” says Noel Hamm, CEO of Sales Tax DataLink, a software provider to tax professionals. “Representatives will come back with renewed strength to fight over healthcare, as this is the top issue on constituents’ minds.”

Hamm notes that the Judiciary subcommittee on Regulatory Reform, Commercial, and Antitrust Law, where the Senate’s MFA bill now resides, has 46 other bills to consider after the recess, many of them involving healthcare. “Based on statements made by the subcommittee’s chairman, Spencer Bachus [R-AL], it will likely be some time before we see any revisions move up to the Judiciary Committee,” Hamm says.

For now, odds are strongly against the Senate’s version of MFA becoming law. Govtrack. us, which handicaps all bills under consideration, gives the Senate bill only a14% chance of being enacted.

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