Washington, DC – Congresswoman Jackie Speier (D-San Francisco/San Mateo) today joins with her Republican colleague Congressman Steve Womack (R-AR) to introduce the Marketplace Fairness Act of 2013 (MFA), H.R. 684, in the House of Representatives.
The bill would level the playing field for small businesses by allowing states to collect the tax owed at point of sale from out-of-state online retailers in the same way that it collects those taxes from local Main Street retailers. The legislation is being introduced in the Senate by Senator Mike Enzi (R-WY), Assistant Senate Majority Leader, Senator Dick Durbin (D-IL), and Senator Lamar Alexander (R-TN).
The MFA is a strictly bipartisan bill that now enjoys the support of 17 Republican and 18 Democratic Members of Congress and the endorsement of the bipartisan National Governors Association.
“Congress talks a good story about protecting small businesses--here's a chance to show we really care. The Marketplace Fairness Act of 2013 represents a fair and workable solution to a problem that has been growing since online retailers opened their virtual doors,” said Speier.
“As a result of an outdated Supreme Court ruling that hasn’t kept up with modern technology and the 21st century marketplace, our local brick and mortar retailers are struggling to stay afloat. Instant comparison shopping by smartphone app has converted local storefronts into showrooms for online-only stores,” explained Speier. The Supreme Court in Quill v. North Dakota specifically said it was up to Congress to remedy this problem.
Eric McCrystal, who runs a small power tools company in San Carlos, CA, has said that it happens regularly—people come in and test his power tools and then go online to buy because they can escape the sales tax--even though it is owed.
“Current law requires that everyone pays personal use tax when they purchase on the internet, but few know to do this. As a result, states and localities that rely on sales tax for revenue to provide vital services are missing an estimated $23 billion annually. In California alone, the estimate of lost sales tax is estimated at $2 billion which would mean another $800 million to the state's schools and that number is conservative,” said Speier.
“With the MFA, my colleagues and I have found a way to level the playing field for all retailers while still protecting small online sellers. It’s time for our tax laws to catch up with the modern marketplace and take government out of picking retail winners and losers,” Speier concluded.
The Marketplace Fairness Act
The bill provides states the authority to require remote sellers to collect and remit sales and use taxes, if they choose to do so, by adopting one of the following options:
· Streamlined Sales and Use Tax Agreement (SSUTA): Allows any state that is a member of SSUTA to require remote retailers to collect state and local sales and use taxes.
· Alternative Minimum Simplification Requirements: States that are not SSUTA members may require remote retailers to collect state and local sales and use taxes if they adopt minimum simplification requirements as outlined in the bill.
Small Seller Exception: The legislation would prohibit states from requiring remote sellers with less than $1 million in annual nationwide remote sales to collect sales and use taxes.
The legislation does not create new taxes or increase existing taxes: Consumers already owe sales and use taxes on the goods they purchase. The legislation simply provides states the authority to enforce existing state and local sales and use tax laws and eliminates the competitive advantage currently enjoyed by remote retailers at the expense of local businesses.
The bill is supported by over 240 business, labor, and state and local government organizations including National Governors’ Association, National Conference of State Legislatures, National Association of Counties, US Conference of Mayors, National League of Cities, Retail Industry Leaders Association, National Retail Federation, International Council of Shopping Centers, Amazon.com, AFSCME, and the International Association of Fire Fighters.