WASHINGTON — For the first time in the group's history, the National Conference of State Legislators descended on Capitol Hill Wednesday and spent the day lobbying Congress on one single issue: an online sales tax bill.

Approximately 600 state representatives and senators attended the NCSL's massive lobbying effort.

The NCSL, along with other state and local groups, have been aggressively courting lawmakers to pass the Marketplace Fairness Act, which was originally introduced last year by Sens. Mike Enzi, R-Wyo., Lamar Alexander, R-Tenn., and Dick Durbin, D-Ill.

That bill would allow the 46 states with sales taxes to require online sellers with no physical presence in a state to collect taxes. The NCSL has estimated that $23 billion in state sales taxes are owed from online sales.

The three senators filed an amendment late last week, hoping it would be included in the National Defense Authorization Act, a large military spending bill. But the amendment failed to come to the floor before the final vote. Lawmakers unanimously approved the $631 billion defense bill with a vote of 98-0 on Tuesday.

Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., determined that the online sales tax amendment was not germane to the defense bill, a senate aide said.

But that didn't stop the NCSL's lobbying effort. Their action plan on Wednesday was straight forward: hear from the MFA's primary sponsors, take their message to their respective state leaders and urge them to pass the bill.

Vermont state Rep. Martha Heath said it's important that lawmakers pass an online sales tax bill because it's about "main street fairness and having out local retailers play on a level playing field."

"These small businesses constitute the hearts of our county and we've been struggling to keep our downtowns vital," said Vermont state Sen. Jane Kitchel. "Every town struggles with empty storefronts and it really has a very negative impact on our village. We see this as part of our downtown revitalization policy."

"With the decisions pending on the federal level, the fiscal impact and losses, this obviously is a source of revenue that can help mitigate and help us deal with that fiscal reality on the state and local level," Kitchel added.

However, not all NCSL attendees support the online sales tax bill. Ed Orcutt, a state representative from Washington said his main concern is that the tax would drive more businesses overseas.

"We heard today that this is a loophole," Orcutt said. "My concern is, does this go from an interstate loophole to an international loophole and do we now just force these online retailers to move to another country? Is there a way to prevent expanding this loophole which has a net effect of the U.S. losing those jobs?"

Orcutt said he had meetings set up later in the afternoon with Democratic Sens. Patty Murray and Maria Cantwell, both from Washington state, and would be expressing a cautionary message instead of asking for their vote.

Enzi, along with Reps. Steve Womack, R-Ark., and Peter Welch, D-Vt., addressed NCSL attendees Wednesday afternoon and strongly encouraged them to make their case to lawmakers.  Enzi even suggested NCSL members get lawmakers' emails so that they can continue communication on the issue. "It's time to mount a major effort and wrap this up," he said.

Enzi, who said he has more than 60 votes secured for the bill, is looking for another vehicle to attach the MFA.

"I wouldn't object to it being in the fiscal cliff, but I don't think it will probably be included in that though," Enzi told The Bond Buyer. "It's not part of the fiscal cliff solution. It will pass if we can bring it up."

Enzi said that some of his colleagues have been concerned over the idea that the bill would raise taxes.

"This doesn't raise taxes, this is just collecting what is already owed," he said. "Once we get people to that understanding then we don't have any problems."

Aside from a year-end deficit reduction package, the three Senators are eyeing a Hurricane Sandy relief aid package as a possible vehicle to move the online sales tax bill this year. A Sandy supplemental aid package is likely to be submitted from the White House to Congress by this Friday.

But, Sen. Dick Durbin, D-Ill., told The Bond Buyer Thursday it's "unlikely"the online sales tax bill will pass by the end of this year because "there is hardly any vehicle to use."

He also said the bill wouldn't be included in any type of Sandy relief package or a fiscal cliff deficit deal.

"It's important and I think we should move on it quickly, but I'm also a realist," Durbin said. "When we suggested putting it on the defense bill, we had assurance from the Senate Finance Committee they would take it up early next year and move it to the floor. That's what I'm counting on."

"The odds are good that it will be considered the first of next year," he added.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.