Groups Urge Lawmakers to Pass Online Sales Tax Bill

Facing stiff opposition in the House from conservative Republicans, state and local groups urged lawmakers to pass an online sales tax bill.

The bill, the Marketplace Fairness Act, overwhelmingly cleared the Senate last month but it has stalled in the House.

The National Governors Association and the National Conference of State Legislatures held a press conference at the National Press Club Wednesday to reiterate their message: the MFA levels the playing field for brick-and-mortar companies and is not a new tax but rather an existing one already owed to states.

Under the MFA, states could authorize out-of-state retailers to collect sales taxes from residents when online goods are sold. Currently, only retailers who have a physical presence in a state can be required to collect sales tax. It’s estimated states and local governments lose $23 billion in revenue each year.

The bill also would allow states to contract with sales tax software service providers in order for online retailers to automate processing a sales tax on an item. Group officials would not elaborate on the cost to states for these sales tax software services.

“You know what, House of Representatives it is time to get off your duff and do what the Senate has done and do what the Supreme Court said 20 years ago, fix it,” said. Rep. Jackie Speier, D-Calif., a co-sponsor of the House version of the MFA.

Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which has jurisdiction over the bill, is not satisfied with the bill’s the language and has ultimately held it from advancing.

Rep. Steve Womack, R-Ark., co-sponsor of the bill, said he is “optimistic” it can pass the House, but added, “there is still a lot of work that needs to take place.” He acknowledged the MFA is competing with a handful of issues, such as immigration, the debt ceiling and the IRS scandal, that Congress needs to finalize first.

“The last thing leadership probably wants to do is bring something to the floor that there is not a real strong appetite for,” Womack said. “I know among House members there is not an appetite yet. Until members of Congress decide they have an appetite for it, it may just stay in the abyss.”

Womack expressed concern that while Goodlatte makes tweaks to the bill, any changes to the small business exemption provision would “neuter” the bill and make it a “paper tiger.”

NGA Executive Director Dan Crippen said the bipartisan bill fundamentally comes down to a matter of fairness. He said it “seeks to reverse federal intrusion into state tax authority.”

“We think there is absolutely no reason that this bill can’t move this year,” Crippen said.

Wednesday’s event comes amid mounting opposition to the bill from lawmakers on both sides of the aisle and grassroots organizations. The We R Here coalition, an organization representing small businesses, called the bill an unfair tax and represents a “massive new regulatory burden” for small online retailers.

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