The National Retail Federation yesterday asked for quick passage of the Simplified Sales and Use Tax Act of 2003, or H.R. 3184, amplifying the civil war pitting direct marketers against retailers generating most revenue through stores.
Such a measure would bring tax equity among all retailers, a senior executive at the Washington-based NRF said. Retailers that do not collect sales tax from most of their customers hold an unfair price advantage over merchants that do.
“Remote sellers have claimed for years that the states' sales tax systems were too complicated for a retailer in one state to know what sales tax to charge a customer from another state,” said Maureen Riehl, vice president and state and government relations counsel at the NRF.
“That's no longer true,” she said. “The states have been busy simplifying their sales tax systems, and there's no longer any excuse for not collecting the sales tax customers owe. The simplification process has given retailers the clarity, and certainly they need to know they're charging the correct amount of tax.”
Reps. William Delahunt, D-MA, and Ernest Istook, R-OK, introduced H.R. 3184 on Sept. 25. In another bipartisan effort, Sens. Byron Dorgan, D-ND, and Michael Enzi, R-WY, are expected to debut a companion bill.
The legislation would let states that have implemented the Streamlined Sales and Use Tax Agreement ask non-state retailers to collect sales tax when selling to their residents.
The streamlined sales tax agreement was in response to a U.S. Supreme Court ruling that exempted remote sellers from collecting sales tax revenue from out-of-state customers. This was under the rationale that states' sales tax laws were too complex to know how much to charge customers.
The NRF's position, of course, is contradictory to the Direct Marketing Association's. The New York-based DMA and its members staunchly resist a tax on customers of catalogers and online retailers in states where those firms have neither offices nor warehouses, or essentially, a nexus.
Approved in November by 31 states, the agreement has uniform definitions and other standards to make it easier for retailers in one state to collect sales tax from a customer in another state.
H.R. 3184 acknowledges some of the difficulties involved in its implementation. It includes a clause that asks states to provide “reasonable and uniform compensation” to retailers for collecting the sales tax. It also sets other standards for administration and court administration.
Direct marketers of all hues, including those selling by mail, telephone or the Internet, fall under the purview of such legislation. Firms with less than $5 million in gross remote annual sales are exempt.