The National Retail Federation has asked members of Congress to support prospective legislation that would make it easier for states to require out-of-state multichannel retailers to collect sales tax in the same way local bricks-and-mortar shops do.
The industry group is supporting the Main Street Fairness Act, put forward by Rep. Bill Delahunt (D-MA), which would allow states that have adopted the Streamlined Sales and Use Tax Agreement to require out-of-state sellers to collect sales tax regardless of whether they have a physical presence in the state. Twenty-four states have adopted the agreement, which aims to simplify sales tax laws and ease retailers’ burden in paying them, since 2005.
Delahunt’s bill would affect online retailers, catalog merchants and 1-800 merchants, according to the NRF.
Maureen Riehl, VP and government and industry relations counsel at the NRF, said the NRF’s stance does not mean it favors an Internet sales tax law enacted in Colorado this year, which web merchants and catalogers have vowed to fight.
“What [Colorado] did is clever, but probably an invasion of privacy, and a huge record keeping burden for retailers. And [it’s] probably unconstitutional, and that’s not the approach we’d like to see states take,” she said, noting that states would need a national law such as Delahunt’s bill, to collect taxes in such a way. “Colorado hasn’t done anything to change its complicated system, and that’s unconscionable. It has thousands of local jurisdictions — that is great for Colorado, but not great if you are a retailer.”
The DMA has sued Colorado over the Internet sales tax bill. The bill requires out-of-state marketers to send a list of purchases to Colorado residents detailing what each consumer bought, as well as a report to the state of Colorado with names, addresses and amounts spent.
Riehl added that while the Delahunt bill would allow states to collect taxes from Internet-based purchases, it would not complicate that process in the way that merchants say the Colorado law has.
“Basically, it shifts the burden away from the retailer as the tax collector back to the state to make sure the proper amount of taxes is being collected,” she said. “There is no substitute for a state having to make its laws simpler.”