Congress has recently renewed efforts to require online sellers to collect sales tax, drawing praise from retail groups.
Under a 1992 Supreme Court ruling, out-of-state sellers are required to collect sales tax only if they have a physical presence in the customer’s state, such as a store, warehouse or office. States and local governments lose close to $25 billion a year because of untaxed online sales, according to the National Retail Federation (NRF).
Senator Michael Enzi, (R-Wyo.), recently reintroduced the Marketplace Fairness Act, legislation that passed the Senate in 2013 but never received a vote in the House. Representative Kristi Noem, (R-S.D.), also recently reintroduced the Remote Transactions Parity Act, a House version of Enzi’s Act, which had also been delayed.
Both measures would allow states to require out-of-state sellers to collect sales tax regardless of whether they have a physical presence in a customer’s state.
The NRF supports this renewed Congressional effort. Currently, online sellers receive an unfair price advantage, contends David French, NRF senior vice president of government affairs.
“With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue,” French continued. “The states know they can’t fix this on their own, but they agree with retailers that Congress has stalled for far too long.”