The Marketplace Fairness Act (S. 743) has garnered 69 votes for final passage in the U.S. Senate and now moves to the House of Representatives, an action that had many retail groups celebrating.
“The current state of inconsistent sales and use tax collection in the United States makes legislation like the Marketplace Fairness Act a necessity,” noted Jennifer Hatcher, SVP of government and public affairs for Arlington, Va.-based Food Marketing Institute (FMI). “The bill simply makes it clear that states have the authority to require online retailers to collect sales and use taxes, as long as the state complies with simplification requirements designed to ease the burden of collection on retailers.”
Currently, there are two separate sets of rules governing the collection of sales taxes: one for online and one for traditional brick-and-mortar retailers. While brick-and-mortar stores are required to collect state and local sales taxes, online operators can’t be required to collect these taxes unless they have a physical presence in the state.
Added Hatcher: “Our most recent research suggests that over the next 10 years, online grocery orders will decrease overall in-store sales by 11 percent, so this legislation reflects and supports the changing retail landscape.”
“The Senate’s overwhelmingly bipartisan passage of this legislation foreshadows the end of the special treatment of big online businesses at the expense of retailers on Main Street,” said Bill Hughes, SVP for government affairs at Arlington-based Retail Industry Leaders Association (RILA). “For too long, the Main Street retailers that are an integral part of their communities have faced tax rules that put them at a disadvantage to their out-of-state, online-only competitors. The Senate has voted to ensure that the market, not government, determines winners and losers. We are confident the House will reach the same conclusion.”
The legislation, sponsored by Sens. Mike Enzi (R-Wyo.), Richard Durbin (D-Ill.), Lamar Alexander (R-Tenn.) and Heidi Heitkamp (D-N.D.), passed the Senate by more than a two-to-one margin. Similar legislation in the U.S. House of Representatives, introduced by Reps Steve Womack (R-Ark.) and Jackie Speier (D-Calif.), has generated strong bipartisan support and currently has more than 60 co-sponsors.
Matthew Shay, president and CEO of the Washington, D.C.-based National Retail Federation (NRF), observed that the Senate passed the act “despite a highly funded misinformation campaign by the legislation’s opposition,” and hailed the action as “a significant step for sales tax fairness.”
He continued: “This bill and its companion in the House will level the playing field for all retailers -- both online and off -- while safeguarding states’ rights. And the bill does it all without raising taxes, new government mandates or adding to the deficit.”
Shay anticipated “a robust debate in the U.S. House of Representatives” regarding the legislation, but predicted that the house would sign the bill, which would then be signed into law.