Congress Debates New Online Sales Tax Bill
Members of the House Judiciary Committee on Tuesday sparred over the implications of a bill that aims to take away states’ ability to collect online sales taxes. Republicans clashed within their own party and with Democrats in a hearing over whether or not H.R. 2887, the “No Regulation Without Representation” act, would help local economies or violate principles of state sovereignty. The bill would prohibit states from forcing businesses that do not have a physical presence in the state to collect sales tax from in-state shoppers that buy from them.
Total Retail's Take: The legality of states imposing requirements for online sales tax collection by out-of-state retailers has been at issue for years now, and there doesn't appear to be a resolution in sight. On one said of the aisle you have those that argue that smaller online retailers shouldn't be burdened with the expense of having to apply sales tax laws that vary from state to state, and on the other side of the aisle you have brick-and-mortar stores arguing that out-of-state online retailers have an advantage in that they're able to undercut them on price because they're not required to collect sales tax on purchases (a position held by the National Retail Federation). Colorado and North Dakota have already passed legislation that would require out-of-state retailers to comply with state sales tax collection laws, and Alabama and Massachusetts have issued regulations to the same effect. At the pace things get done in Washington, expect this debate to carry on for some time.
