ABA Asks Congress to Add E-Fairness Bill to Economic Stimulus Package

This week, in a letter [1] addressed to Democratic and Republican leaders in the U.S. Senate and House of Representatives, the American Booksellers Association joined the E-Fairness Coalition in calling on Congress to include the provisions of the Sales Tax Fairness and Simplification Act (STFSA) in any economic stimulus legislation under consideration. STFSA is a bipartisan bill introduced in the House (H.R. 3396) by Rep. William Delahunt (D-MA) and in the Senate (S. 34) by Sen. Mike Enzi (R-WY). The bill would authorize member states of the Streamlined Sales Tax Project (SSTP) to collect sales tax on Internet and catalog sales to customers in participating states.

In the letter, ABA COO Oren Teicher wrote: "Including the STFSA provisions in a stimulus package would provide billions of dollars in funding to many state and local governments at a minimal or no cost to the federal government, assisting these states and localities in providing vital and funding-challenged services, including education, emergency preparedness, homeland security, health care, and transportation."

STFSA would authorize member states of the Streamlined Sales Tax Project (SSTP) to collect sales tax on Internet and catalog sales to customers in participating states. SSTP is an effort created by state governments, with input from local governments and the private sector, to simplify and modernize sales and use tax collection and administration, making it much easier for online retailers to collect sales tax.

Noting that a University of Tennessee study has estimated a revenue loss to state and local governments of more than $30 billion a year in uncollected sales taxes for remote sales, Teicher stressed: "Particularly during this time of significant state budget shortfalls, enactment of the STFSA would go a long way to helping states collect existing taxes already owed by state consumers. Further, enactment of the STFSA would allow states and localities to preserve jobs in essential service industries, continue to provide these essential services to our communities, and avoid having to impose new taxes to close their budget deficits."

More information about the various aspects of ABA's campaign for e-fairness are available on the Sales Tax Advocacy page on BookWeb.org [2].

January 15, 2009

Re: Funding for State and Local Governments in a Stimulus Package

Dear Speaker Pelosi, Senate Majority Leader Reid, Senate Minority Leader McConnell, and House Minority Leader Boehner:

As a national nonprofit trade association representing independent booksellers across the country, we join our colleagues at the E-Fairness Coalition in calling on you to include in any economic stimulus legislation under consideration the provisions of the Sales Tax Fairness and Simplification Act (STFSA). STFSA is a bipartisan bill introduced in the House of Representatives as H.R. 3396 by Rep. William Delahunt (D-MA) and in the Senate as S. 34 by Sen. Mike Enzi (R-WY). Including the STFSA provisions in a stimulus package would provide billions of dollars in funding to many state and local governments at a minimal or no cost to the federal government, assisting these states and localities in providing vital and funding-challenged services, including education, emergency preparedness, homeland security, health care, and transportation.

By way of background, 45 states plus the District of Columbia use sales and use taxes as an integral part of their revenue systems. Currently, Main Street brick-and-mortar retailers are required to collect sales taxes, as are online and catalog retailers that have nexus in a state. Although the requirement of paying the "use tax" (which corresponds to the sales tax) then shifts to the consumer, most consumers are not aware of this requirement, and, accordingly, few comply. By providing Congressional consent, the STFSA would authorize those states conforming with the "Streamlined Sales and Use Tax Agreement" (SSUTA) to require retailers to collect sales tax on remote sales, as further described below.

As you may know, the SSUTA was approved by 34 states in November 2002, and it provides comprehensive and reasonable guidelines to simplify the states' sales tax rules. Today, 22 states, representing over 57 million constituents, have enacted legislation to change the tax laws and implement the requirements of the SSUTA.

Including the provisions of STFSA in the upcoming economic stimulus legislation would empower those states that have complied with the SSUTA to require out-of-state sellers to collect sales tax on remote sales, just as traditional in-state retailers do today. The Delahunt/Enzi proposal also includes an exemption for small business retailers.

A University of Tennessee study has estimated a revenue loss to state and local governments of over $30 billion a year in uncollected sales taxes for remote sales. Furthermore, a National Conference of State Legislatures (NCSL) report from December 2008 predicts that states currently are experiencing a combined budget deficit of approximately $30 billion. The NCSL report also projects a cumulative shortfall of over $60 billion for fiscal year 2010, "a gap likely to grow as more states assemble revenue and expenditure forecasts for the coming fiscal period."

Particularly during this time of significant state budget shortfalls, enactment of the STFSA would go a long way to helping states collect existing taxes already owed by state consumers. Further, enactment of the STFSA would allow states and localities to preserve jobs in essential service industries, continue to provide these essential services to our communities, and avoid having to impose new taxes to close their budget deficits. As you consider economic stimulus legislation intended to preserve and create jobs and to provide funding to states and localities with budget shortfalls, we urge that you consider the STFSA provisions a vital component of any economic recovery legislation.

We appreciate your consideration of our request.

Sincerely,

Oren Teicher, ABA COO
American Booksellers Association
200 White Plains Road
Tarrytown, NY 10591