The time has come for sales tax fairness

With state and local governments across the nation losing $24 billion a year to untaxed Internet sales, pressure is mounting in Washington for Congress to level the playing field between online merchants and Main Street retailers. And after delaying action for a full decade, Congress in finally hearing the message. In addition to the long-pending Main Street Fairness Act, lawmakers recently introduced the simpler Marketplace Equity Act, and a hybrid of the two, the Marketplace Fairness Act. Download a comparison of all three bills.

Sales tax fairness is a key element of NRF’s Retail Means Jobs campaign because Main Street retailers who have to collect sales tax are under increasing competition from online competitors who aren’t required to collect. Sales tax fairness is about more than fairness among retailers – it’s about protecting local jobs that are badly needed to support American families and keep towns and cities thriving.

Resources

These resources were generated by the National Retial Federation to help retailers, legislators and consumers contextualize this issue. Please share these!

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Uncollected taxes are endangering important local services

State and local governments are losing $24 billion annually in uncollected sales taxes at a time when they are facing soaring budget deficits. Without this money, many local officials are faced with a difficult choice – raise other taxes and place a further burden on citizens already struggling to survive in the current economy, or eliminate jobs of essential service members like teachers, police officers, firefighters and ambulance crews.

Sales tax fairness isn’t only about protecting the jobs of Main Street retailers – it’s about saving jobs of the people who are educating and protecting our local communities.

The history of Internet Sales Tax

In a 1992 ruling, the Supreme Court said out-of-state sellers can only be required to collect sales tax if they have a store or other physical presence in the customer’s state. The court reasoned that sales tax rules in the 45 states and more than 7,000 local governments that charge sales tax were too complicated for an out-of-state seller to know how much to collect. States responded by creating the Streamlined Sales and Use Tax Agreement, which would simplify sales tax laws to address the court’s concern. The Main Street Fairness Act was first introduced 10 years ago to allow states that had complied with the agreement to require out-of-state sellers to collect. But Congress was slow to pass the legislation because few states had initially signed the agreement, and states were slow to sign because Congress had not voted. The two new bills under consideration would simplify the conditions for states to participate, and are expected to break the stalemate.