02:00 pm
23 June 2016

Will 2016 Be The Year Congress Passes Online Sales Tax Legislation?

Will 2016 Be The Year Congress Passes Online Sales Tax Legislation?

Proposals for online sales tax legislation have been circulating Washington D.C. for years- with no success.  But now, with the passage of FIRPTA reform, brick and mortar retail industry groups can fully focus on supporting new Congressional efforts to make online sales taxes a reality.

In March, 2015, Senators Dick Durbin (D-ILL), Lamar Alexander (R-TN), Mike Enzi (R-WY) and Heidi Heitkamp (D-ND) submitted the “Marketplace Fairness Act,” which would endow the states with more power to collect taxes from merchants who have no physical location within their borders. This latest bill is similar to a previous version that was abandoned in 2013 – when the climate on Capital Hill was dramatically different than today.

As further evidence of increased acceptance of the need for such a measure, a House version, the “Remote Transactions Parity Act,” was introduced by Representative Jason Chaffetz (R-UT) in June of 2015 with many of the same tax reform features called for in the Senate version.  The Chaffetz bill has received written support from literally hundreds of retail groups including the International Council of Shopping Centers (ICSC), the National Association of Real Estate Investment Trusts, NAIOP Commercial Real Estate Development Association, Retail Industry Leaders Association and Chambers of Commerce, major private and public companies and small businesses across the United States.

These entities agree that, “addressing the collection of online sales taxes must be based on destination sourcing. This approach is necessary to solve the key problem of price disparity at the point of purchase that is unfairly impacting community-based businesses.”  States are currently barred from collecting sales taxes from out-of-state retailers due to a 1992 Supreme Court decision – coincidentally a decision that last year Justice Anthony Kennedy stated should be revisited.

While there will continue to be opposition from Amazon and select big box stores, there seems to be broader support than ever before to level the tax playing field between brick-and-mortar stores and online merchants. As America’s marketplace evolves and increasingly explores multi-channel opportunities, enactment of critical retail tax reform legislation seems ever more important.