After years of being put on hold, legislation enabling states to collect sales taxes on purchases made online is gaining momentum in Congress. But an opposition campaign is being waged by NetChoice executive director Steve DelBianco, who warns that enacting an online sales tax bill would throw the e-commerce world into chaos.
If any one of three pending Internet tax bills (Main Street Fairness Act, Marketplace Equity Act, and Marketplace Fairness Act) is enacted, DelBianco claims the law would burden remote sales, including e-commerce, with unrealistic administrative taxes and increase the cost of doing business online.
?DelBianco, who has been deeply engaged on Internet tax issues for over a decade,?detailed his disagreement with the online sales tax bills at last month?s National Etailing and Mailing Organization of America fall directXchange conference.? According to pending legislation, e-commerce sites and catalogs would be required to calculate tax rates for over 9,600 tax jurisdictions, each with its own rates and sales tax holidays, DelBianco said. Online retailers would have to file returns for each of the 46 taxing states; endure potential tax audits from 46 state tax authorities; and invest in computer systems changes and additional accounting resources.
If enacted, the collections of sales tax by online retailers would repeal the 1992 Supreme Court decision, Quill Corp. vs. North Dakota, which rules that a taxpayer must have a physical presence, such as a store or warehouse, in a state in order to require collection of sales or use tax for purchases made by in-state customers. Small companies (with sales of $1 million or less nationally or less than $100,000 in a given state) are exempt from the requirement.
With U.S. online retail sales still growing at an impressive rate, the potential to collect significant sales tax revenues has turned state and local governments into the biggest promoters of Internet sales tax legislation. The bill also has wide support among bricks-and-mortar retailers such as Walmart and Home Depot that complain Internet retailers have an unfair price advantage because of their tax-free status.
In July, DelBianco testified at a hearing before the U.S. House Committee on the Judiciary on the consequences of HR 3179, the ?Marketplace Equity Act of 2011.? For businesses without stores or distribution centers in multiple states, HR 3179 would allow states to impose a new tax with uniquely complex burdens of nearly 10,000 tax jurisdictions in 46 states, DelBianco explained in a written copy of his testimony.
Lobbyists and policy analysts say online sales tax legislation was bound to gain more traction as Congress searches for solutions to avoid the so-called fiscal cliff looming at the end of the year. Facing a combination of expiring tax cuts and congressionally ordered budget sequestration requiring deep cuts in spending, some lawmakers now think the time has come to force Internet retailers to collect sales taxes.
Source: MultiChannelMerchant.com
Source: http://www.dailydealmedia.com/78internet-sales-tax-bill-poses-threat-to-e-commerce-world-order/
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