Washington–Retail and shopping center executives came together here Thursday to show support for the Main Street Fairness Act (H.R. 5660) which calls for all Internet retailers to collect sales taxes for all purchases made online.
Should Congress approve the bill, which was introduced earlier this month, it would create level playing field between brick-and-mortar and Internet retailers, advocates say. Currently, pure play e-commerce websites only have to collect sales taxes in states where they have a physical nexus, such as a store, office, warehouse or distribution center.
“Many Internet retailers currently enjoy a competitive pricing advantage over brick-and-mortar retailers because of a loophole in the tax code that doesn’t require them to collect state sales taxes. The Main Street Fairness Act would ensure that all retailers, regardless of where they are located, collect and remit state sales taxes,” said Rep. William Delahunt (D-Massachuetts) who introduced the bill.
Most states already have what is known as a “use tax,” which requires consumers to pay a tax when they make a remote or online purchase and sales tax is not collected by the retailer. However, few consumers are aware of this tax liability, Delahunt said, adding that states potentially lose millions in tax revenue. A 2009 University of Tennessee study estimates that in 2012 that number could be as high as $23 billion.
Widespread Retail Support for Main Street Fairness Act
“The argument made by Internet retailers over a decade ago that they could not collect and remit local sales taxes, because of a patchwork quilt of state sales tax laws, is no longer valid. Today, low-cost technology exists to enable retailers to calculate the amount of sales tax owed on Internet purchases. If brick-and-mortar retailers collect and remit taxes on Internet purchases then Internet retailers can and should,” said Michael P. Kercheval, president and ceo, International Council of Shopping Centers (ICSC).
The legislation is supported by the National Retail Federation, Retail Industry Leaders of America, International Council of Shopping Centers, Real Estate Investment Trusts Association, National Governors Association, U.S. Conference of Mayors, the National Conference of State Legislatures, National Association of Counties, and National League of Cities, as well as over 50 state-level retail associations and chambers of commerce.