Rep. Delahunt Introduces Sales Tax Fairness Bill

Late last week, Rep. William Delahunt (D-MA) introduced the Main Street Fairness Act (H.R. 5660) in the U.S. House of Representatives. The bill would authorize the 24 states that are part of the Streamlined Sales and Use Tax Agreement (SSUTA) to require remote retailers to collect and remit sales tax on orders in their states. "This bill is designed to help states retrieve billions in sales tax revenues that are owed but currently going uncollected while providing long overdue relief to Main Street businesses by restoring fairness and competition to the marketplace," said Delahunt in a statement.

ABA CEO Oren Teicher applauded Delahunt's efforts on behalf of Main Street retailers. "ABA is pleased that Rep. Delahunt has introduced this important legislation, and we urge Congress to give this legislation high priority," Teicher said. "As we've stated many times before, ABA supports federal legislation to establish sales tax equity and has never seen a conflict between SSUTA and the statewide solutions that we continue to work on all across the country. The goal should be to find a solution to the enormous inequity that currently exists among retailers and to provide states with badly needed revenue in these difficult economic times. As such, while we back Rep. Delahunt's efforts to the fullest, we also will continue to vigorously support affiliate nexus laws such as the ones passed in New York, North Carolina, and Rhode Island."

In addition to ABA, some of the organizations that publicly support the Main Street Fairness Act include the Retail Industry Leaders Association (RILA), National Retail Federation (NRF), the Colorado Retail Council, the National Conference of State Legislatures (NCSL), the National Governors Association, Sears Holding Company, and Simon Property Group.

In addition, on Thursday, July 8, the InfoWorld blog, Tech's Bottom Line, by Bill Snyder, published an editorial in favor of Delahunt's bill, "Why It's Time to Tax Internet Sales." Noting that the Main Street Fairness Act would end the exemption for big online retailers like Amazon.com and eBay, Snyder wrote: "The Internet is no longer a baby that needs to be cosseted and protected from the real world, and favoring Internet business over brick-and-mortar ones via a tax exemption is not fair."

Following the introduction of the Main Street Fairness Act, Delahunt noted that sales tax revenues comprise up to a third of most state budgets. "This year, an estimated $18.6 billion will go uncollected; by 2012, the states will be losing at least $23 billion annually, based on conservative estimates," he stated. "From 2009 - 2012, this amounts to a loss of approximately $55 billion. In some cases, these revenue losses can comprise up to one half of a state’s budget shortfall."

SSUTA looks to simplify and modernize sales and use tax collection and administration to make it much easier for online retailers to collect sales tax. To date, 24 states are part of SSUTA and have simplified and streamlined their sales tax laws under the compact's uniform set of guidelines. The Main Street Fairness Act, Delahunt noted, provides congressional authority for this interstate compact to take effect. The legislation does not compel any state to join, but any state that adopts this system would then have the authority to require online retailers to collect and remit sales taxes.

"This bill would close a loophole that has allowed online merchants to enjoy an unfair price advantage over local stores for far too many years,” NRF Vice President and Government and Industry Relations Counsel Maureen Riehl said in a statement. “We believe in a level playing field where everyone plays by the same tax rules regardless of whether you sell merchandise in a Main Street store, through a catalog, or over the Internet."

"Congressman Delahunt’s willingness to work with everyone involved in the sales tax simplification effort is to be commended," said Iowa State Representative Christopher Rants, co-chair of the National Conference of State Legislatures Task Force on State & Local Taxation of Communications and Electronic Commerce, in a statement. “With the adoption of the Delahunt legislation, at a time when states are facing historic budget gaps, Congress can provide fiscal relief, $23 billion, for the states without a single penny of cost to the federal government."