Retail News Breaks Archives
NACDS backs bill to close online sales tax loophole
August 2nd, 2012
ALEXANDRIA, Va. – Calling for a more level playing field, the National Association of Chain Drug Stores has endorsed legislation that would enable states to collect sales tax on purchases made via online retailers and other remote vendors.
NACDS said that it submitted a statement on Wednesday to the Senate Committee on Commerce, Science & Transportation to express its support for the Marketplace Equity Act (S. 182), introduced by Sen. Mike Enzi (R., Wyo.). The letter was for the committee's hearing titled "Marketplace Fairness: Leveling the Playing Field for Small Businesses."
Currently, states are missing out on millions of dollars in sales tax receipts because retailers without a physical presence in their states — particularly Internet retailers — aren't required to collect sales taxes from consumers making purchases.
"Enactment of the Marketplace Equity Act would help preserve Main Street businesses that are critical to the economic vitality of their communities and empower states to address their budget challenges without raising taxes, or adding to the federal deficit," NACDS said in the statement for the hearing.
NACDS joined with other retail trade groups, including the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA), in urging Congress to pass legislation establishing "e-fairness."
The organizations said the Marketplace Equity Act would close a loophole created by the 1992 Supreme Court decision in Quill v. North Dakota, in which the court ruled that states could only require out-of-state sellers to collect sales tax if they had a physical presence or nexus in that state.
"This loophole not only disadvantages brick-and-mortar retailers, it also ties the hands of cash-strapped states, preventing them from collecting the sales taxes owed to them," NACDS president and chief executive officer Steve Anderson stated in letters sent to key congressional leaders. "We urge Congress to approve the Marketplace Equity Act to level the playing field between brick-and-mortar and Internet and other remote sales," he added.
In its statement to the Senate Commerce Committee hearing, NRF called on lawmakers to pass S. 182 this year.
"The Marketplace Fairness Act resolves this [sales tax] issue, providing fairness to both consumers and retailers and maintaining the sales tax base for the 45 states that rely on a sales tax system," commented David French, senior vice president at NRF.
Katherine Lugar, RILA's executive vice president of public affairs, called the Senate hearing on Wednesday "a win for those who believe in free markets."
"No compelling argument was made today to justify continued preferential treatment in the tax code that gives online retailers an artificial competitive advantage over brick-and-mortar stores," Lugar stated.