Marketplace Fairness Coalition Urges House to Consider Sales Tax Fairness

In a letter being sent Friday, June 28, the Marketplace Fairness Coalition (MFC) is urging the U.S. House of Representatives Committee on the Judiciary to hold a hearing on sales tax fairness. MFC includes among its members the American Booksellers Association, the International Council of Shopping Centers (ICSC), and the Retail Industry Leaders Association (RILA).

In a letter to Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI), MFC wrote: “We respectfully request a hearing to examine the inequities between local and remote businesses sales tax collection obligations. The problems with the current collection system harm local businesses, fostering an inequality in the marketplace that is fundamentally unsustainable.”

The group also noted: “We welcome a comprehensive and thoughtful review of potential solutions to fix the current sales tax fairness problem through regular order in the Committee.  We remain open to any ideas for strengthening or otherwise improving legislative proposals so long as the ultimate goal of leveling the playing field for all businesses and restoring federalism is achieved.  We are also committed to protecting small businesses through simplification of state sales tax statutes, seller compliance assistance, and creating an environment of business certainty moving forward.” (To read the full text of the letter, click here.)

The coalition letter comes after 30 members of the eMainStreet Alliance spent two days in Washington, D.C., earlier this week lobbying House representatives in opposition to the bill. In a press release issued in advance of their lobbying effort, the Alliance said that it had grown to 500 members, and it continued to contend that e-fairness advocacy was an effort on the part of large retailers to crush their small business competitors with extra tax paperwork:

“The triple threat of tax-hungry state legislatures, Big Retail led by Walmart, and opportunistic sales-tax software companies have joined forces in support of the MFA,” said Justin Krauss of Garage Flooring LLC. “They will all profit off of our burden and we know if we don’t speak up we’re going to get crushed.”

David Grogan, ABA senior public policy analyst, dismissed Krauss’s claims. “Even cursory research into the issue of sales tax fairness clearly shows that this campaign began over a decade ago with independent booksellers, most of whom are small business owners. Since then the alliance of businesses that has organized to fight for sales tax fairness has come to include a broad range of Main Street retailers and businesses.”

Grogan noted that opponents are attempting to obfuscate the issue with misinformation and by leaving out key details of the bill. He pointed out how opponents often fail to mention the legislation’s $1 million small seller exception, which would exempt most small businesses from the requirement to collect and remit sales tax.

The Honorable Robert Goodlatte
Chairman, Committee on the Judiciary
U.S. House of Representatives
Washington, D.C. 20515

The Honorable John Conyers, Jr.
Ranking Member, Committee on the Judiciary
U.S. House of Representatives
Washington, D.C. 20515

Dear Chairman Goodlatte and Ranking Member Conyers:

On behalf of the thousands of American businesses represented by the Marketplace Fairness Coalition, we respectfully request a hearing to examine the inequities between local and remote businesses sales tax collection obligations.  The problems with the current collection system harm local businesses, fostering an inequality in the marketplace that is fundamentally unsustainable.  A hearing will give all parties the chance to engage in a constructive and meaningful path toward leveling the playing field for all businesses.

The Marketplace Fairness Coalition represents thousands of American businesses – large and small, as well as both brick-and-mortar and online.  A broad coalition of sellers, states, and municipalities from across the country recognize that the time has come to pass legislation that would level the playing field and restore fairness to the marketplace. The depth of support among the seller community is echoed in the Congress where there is broad, bipartisan and growing support for sales tax fairness legislation.    

At issue is a decades-old Supreme Court ruling, issued in 1992 before the pervasiveness of Internet commerce, which prohibits states from requiring remote sellers to collect sales and use taxes owed on purchases from out-of-state vendors.  As you know, only Congress can grant this authority to states.  This has created an unfair price disadvantage for brick-and-mortar businesses, has led to base erosion for states as sales taxes go uncollected, and has placed an undue burden on consumers who do not realize they owe the sales tax if it is not collected by the seller.

We welcome a comprehensive and thoughtful review of potential solutions to fix the current sales tax fairness problem through regular order in the Committee.  We remain open to any ideas for strengthening or otherwise improving legislative proposals so long as the ultimate goal of leveling the playing field for all businesses and restoring federalism is achieved.  We are also committed to protecting small businesses through simplification of state sales tax statutes and creating an environment of business certainty moving forward.

As the Committee continues examining this issue, please let us know if you have any questions.  We would be happy to be of assistance.

Sincerely,

The Marketplace Fairness Coalition