New Federal Sales Tax Fairness Legislation Introduced

On Wednesday, October 12, a coalition of small businesses, including independent booksellers, gathered in Washington, D.C., to join Rep. Jackie Speier (D-CA) and Rep. Steve Womack (R-AR) at a press conference to announce the introduction of federal sales tax fairness legislation. The Marketplace Equity Act (MEA) provides states with the authority to require remote retailers, including online-only businesses, to collect and remit sales taxes.

“We’ve always believed that it’s far better to have multiple potential solutions on the table in support of sales tax fairness and equity,” said ABA CEO Oren Teicher. “And every new approach signifies the critical importance in finding a solution to this issue sooner rather than later.”

“The introduction of bipartisan legislation ensuring a level playing field between online-only and brick-and-mortar retailers concerning sales tax collection is a positive development for all those committed to protecting jobs and small businesses,” said Danny Diaz, spokesperson for the Alliance for Main Street Fairness (AMSF). “Government should not be picking winners and losers in the marketplace, and the principles put forward in e-fairness legislation will place the authority for sales tax collection where it should be, with the individual states.”

MEA closes a loophole exploited by online-only retailers, which has a significant, negative impact on bricks-and-mortar retailers, by ensuring that no one class of merchants is given a government-sanctioned unfair advantage.

In late July, U.S. Sen. Dick Durbin (D-IL) introduced the Main Street Fairness Act, federal sales tax fairness legislation that would authorize states under the Streamlined Sales and Use Tax Agreement (SSUTA) to require remote retailers to collect and remit sales tax in those states.  Rep. Speier characterized her bill as “dramatically different” from the Durbin bill, noting that the Main Street Fairness Act would cover all states under the SSUTA while hers authorizes states to collect their own sales tax, as reported by the San Jose Mercury News.

MEA also provides for a simplified system for state-collection authority. In order to qualify, a state — either individually or through an interstate compact — must implement a system that meets four minimum requirements: a robust small business exemption; a consistent rate throughout the state; a uniform tax base for the state; and centralized filing and remitting.

“Congress must act now to pass a national e-fairness legislative act to level the playing field so small businesses are not faced with an almost 10 percent price disadvantage,” said Teri Tanner, owner of A Real Bookstore in Fairview, Texas, who was at the press conference.

Other ABA member booksellers who traveled to Washington, D.C., for the press event included Ed Hermance, Giovanni’s Room in Philadelphia, Pennsylvania; Matt Norcross, McLean & Eakin Booksellers in Petosky, Michigan; and Alzada Knickerbocker, The Avid Reader in Davis and Sacramento, California.