Retailers speak up against online sales tax bill

The National Retail Federation isn't too crazy about a bill that would block states from requiring online retailers to collect sales tax -- a move that would widen the gap between brick-and-mortar and e-commerce.

As such, the NRF is asking a House committee to reject the measure. “As online sales become a larger percentage of total retail sales, it is imperative that policymakers recognize that … government should not favor remote sales over sales made in a bricks-and-mortar store,” NRF Senior Vice President for Government Relations David French said.

“H.R. 2887 would exacerbate the current discrimination against local bricks-and-mortar retailers and lead to a further decline of Main Street retailers,” French said. “”H.R. 2887 goes in the opposite direction of fairness.”

These comments were part of a letter sent to members of the House Judiciary Committee, which is holding a subcommittee hearing this morning on the No Regulation Without Representation Act, sponsored by Representative James Sensenbrenner, R-Wis.

The Sensenbrenner bill would bar states from requiring that out-of-state online sellers collect sales tax on sales made to their residents. This is reminiscent of a 1992 U.S. Supreme Court ruling that said sellers can only be required to collect sales tax in states where they have a physical presence.

In contrast, a series of bills have been introduced in Congress over the past 15 years that would allow states to require online sellers to collect sales tax, regardless of whether they have a physical presence -- ultimately leveling the playing field with local stores. The NRF urged that the committee hold a hearing on the current House version of those bills, the Remote Transactions Parity Act, sponsored by Representative Kristi Noem, R-S.D. The bill also requires states that want to participate to simplify their sales tax laws and offers audit protection sought by smaller retailers.

“This legislation provides parity at the point of sale, so essential to the need of Main Street America,” French said.