NRF Applauds Internet Sales Tax Bill

The National Retail Federation said it welcomed the introduction of legislation that would require Internet retailers to collect sales tax the same as local bricks-and-mortar stores.

“We believe there should be a level playing field where all retailers follow the same rules regardless of whether they sell their merchandise in a bricks-and-mortar store, through the mail or online,” NRF Senior Vice President for Government Relations David French said. “This bill would end a situation where Internet sellers have held an unfair price advantage over local stores for far too long. Tax policy should be channel neutral and not favor one segment of an industry over another.”

The U.S. Supreme Court ruled in 1992’s Quill v. North Dakota that retailers are required to collect sales tax from out-of-state customers only if they have a physical presence such as a store, warehouse or office in the customer’s state. The court held that the 45 state and 7,600 local sales tax systems across the nation were too complicated for a retailer to otherwise know how much tax to collect.

Senate Majority Whip Richard Durbin, D-Ill., last week introduced the Main Street Fairness Act. The bill would allow states that have adopted the Streamlined Sales and Use Tax Agreement – which was developed to simplify sales tax laws in response to the Supreme Court ruling – to require out-of-state sellers to collect sales tax whether they have a physical presence or not. The bill would cover all “remote sellers,” which include online retailers, catalog merchants and 1-800 offers on radio and television.

“This is a constitutional snafu that requires a congressional fix,” French said. “The framers of the Constitution never envisioned Internet sales and probably didnt envision catalog sales, so they said interstate commerce should be the purview of Congress. But all trends in retail show that the Internet is growing faster than any other channel of retail, so the longer Congress leaves this unfixed the larger the consequences become and the greater the pressure is to act.”